INDIANAPOLIS — Motorists getting ready for the Fourth of July are feeling a little relief as the nation’s average gas price continues to fall. But the looming hurricane season may cause more pain at the pump.
GasBuddy reports the nation’s average gas price has declined for the second week in a row. Data from more than 150,000 gas stations shows the price fell 8.8 cents to $4.88. However, prices remain more than a dollar higher than they were at the same time in 2021.
“With Independence Day a week away, gas prices have continued to fall for the second straight week as the price of oil has faltered, ushering in the drop we’re seeing. The good news is we could also see a third straight week of decline,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “While prices will be at their highest July 4th level ever, they’ll have fallen close to 20 cents since our peak in early June.”
The AAA reports Indiana saw one of the largest weekly decreases in gas prices in the nation, down 12 cents from week to week. According to the AAA, The average gas price as of June 27 in Indianapolis is $5.01. In comparison, at this time last year, the average gas price was $3.12.
While gas prices may continue to fall other the week, De Hann warns that any sudden jolts to supply could cause a turnaround. He provided the example of when the peak of hurricane season arrives, we could see a spike at the pump.
The AAA reports a drop in the global price of oil contributed to the decrease in gas prices. Fears of a potential global recession led to less demand for oil. Oil prices dropped from $110 per barrel to around $107 per barrel.
“Fear is not a good reason to move a market like the one for oil, but it is a powerful motivator,” said Andrew Gross, an AAA spokesperson. “The cost of oil accounts for nearly $3 for every $4.89 at the gas pump. Consumers should find more relief when fueling up if oil prices drop further.”
Indiana about to see higher gas prices
While gas prices have dropped in Indiana over the last week, motorists are about to see an increase in costs. On Friday, two taxes on gasoline will increase. This includes the gasoline use tax and the gas excise tax.
The Indiana Department of Revenue calculates the gasoline use tax by taking the average retail price per gallon of gasoline in the prior month and multiplying it by the state retail tax of .07 cents. The state said the average retail cost was $4.1586.
People buying gasoline in Indiana will also see an increase in the state excise tax in July. The tax will increase from 32 cents to 33 cents due to an annual increase as per Indiana law.
The gasoline tax use tax has increased steadily since it reached its lowest point on record in June 2020. In May, the tax passed the previous record of 22.9 cents set in July 2014.
Local and national calls to suspend gas tax
President Joe Biden recently asked Congress to support him in ending the federal gas tax for three months. His hope is lawmakers will pause the tax, which charges 18 cents per gallon for regular gasoline and 24 cents per gallon for diesel fuel, through the end of September.
President Biden also asked states to freeze their own gas taxes.
Indiana Democrats have continually called for Indiana’s gas excise tax and gasoline use taxes to be suspended. However, Republican legislative leaders argue that much of the gas tax money is dedicated to the state’s highway construction program. They pushed for a plan to gradually cut Indiana’s individual income tax rate over the next seven years.
“Generally it should be understood that the fuel tax in the U.S. is one of the main revenue sources for road infrastructure,” said Denvil Duncan, an associate professor at the IU Bloomington O’Neill School of Public and Environmental Affairs. “That is true across pretty much across all states and at the federal level it’s almost 100 percent between highways and mass transit.”
Instead of suspending the gasoline use tax, Governor Holcomb announced a plan to return $1 billion from the state reserves to Indiana taxpayers. The Governor said the $225 payment would help them deal with high gas prices and inflation.
Governor Holcomb set a July 6 date for a special session for lawmakers to take action on the plan. State Rep. Gregory W. Porter, who represents District 96 in Indianapolis, is asking the governor and his fellow legislators to make sure residents on Social Security receive the payments, including those who are retired, disabled or on Supplemental Security Income (SSI).