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Why gas prices are suddenly shooting back up again ahead of MDW

The conflict in Ukraine is driving high prices and Michigan's hefty gas tax isn't helping
Gas Prices
Posted at 4:39 PM, May 17, 2022
and last updated 2022-05-17 20:51:14-04

GRAND RAPIDS, Mich. — Now well into its third month, the conflict in Ukraine is still negatively affecting gas prices thousands of miles away.

In the U.S., the national average of $4.53 is the highest it’s been in 18 months, according to expert energy analyst Patrick DeHaan with GasBuddy.

“I think as long as Russia is continuing its invasion of Ukraine, gas prices will remain quite elevated,” said DeHaan. “This is going to be the territory I think we spend most of the summer in.”

On top of existing tensions in Ukraine that sent prices skyrocketing in March, now, the European Union’s talk of sanctioning Russian oil and China reopening some major cities are causing a cataclysmic supply-demand issue.

“Three or four weeks ago, things were looking a little bit better. But now the EU has talked about sanctioning Russian oil…very instantly oil demand goes up in China, the problem is there’s just not enough oil to meet that demand,” said DeHaan.

Right now Michigan’s average per gallon is $4.59, six cents above the national average. But Michigan is one of 16 states that DeHaan says stand to actually make money from higher prices at the pump.

Michigan levies a hefty 27-cent-per-gallon gas tax to pay for road and bridge repairs.

“The higher the prices go at the pump, the more Michigan gets to take that to the bank for doing nothing at all,” said DeHaan.

Despite urging the federal government to suspend the national gas tax, in March, Governor Gretchen Whitmer vetoed a bill approved by the state House and Senate that would temporarily suspend the state gas tax.

Other states, including Georgia, Maryland, Connecticut, and Florida have all legislatively approved holidays from their state gas tax.

In response to a FOX17 inquiry about the veto, a spokesman for the governor drew attention to her More for MI Money plan rolled out in March, which in part called for the suspension of the state's 6% sales tax on gas.

Her office noted that the bill to suspend the state gas tax passed by the majority-GOP legislature in March would've paused the tax effective in 2023, not immediately. They said the bill was "moot and no providing relief at all this year."

The governor's office also provided the following statement:

“Governor Whitmer is ready to take action to immediately lower costs and put more money back in people’s pockets. That’s why she launched the More for MI Money plan, which will ensure more Michiganders keep more of their hard-earned money. This plan would pause the sales tax on fuel to provide relief to drivers, while also building on our proposals to eliminate the retirement tax to save seniors $1,000 per year and tripling the tax credit for working families to put a total of $3,000 back into their pockets. All of this is in addition to the $400 refund checks for drivers that have been hitting mailboxes or bank accounts over the last two months. Governor Whitmer will bring together Republicans and Democrats to negotiate a bill that saves Michiganders money, just as we’ve done for the past 800+ bipartisan bills.”
Bobby Leddy, Dir. of Communications, Office of Gov. Gretchen Whitmer

The AAA-estimated 1-million Michiganders expected to travel on the upcoming Memorial Day weekend shouldn’t hold their breath for much relief before then, DeHaan says.

“Short answer, it’s not guaranteed but I would kind of guess that we could see another jump maybe to $4.69 before Memorial Day.”

And diesel is a whole story unto itself. Ten states are averaging above $6 for a gallon of diesel and its putting a pinch on logistics and people’s wallets away from the gas station.

“This is something that’s going to hit your wallets, not necessarily from filling you tanks, but next time you go to the grocery store or the hardware store,” said DeHaan. “Everything in this country is essentially shipped via semi-truck.”