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Mon August 27, 2012
Michigan's high gas prices explained
As Labor Day Weekend approaches, Michiganders are seeing higher gas prices.
Last year, we asked why Michigan's gas prices are so expensive.
The answer may be a combination of state taxes and delivery costs.
According to the April issue of Petroleum Marketing Monthly, Michigan’s gas taxes are around 19 cents a gallon, which is lower than the national average of 22.60 cents a gallon.
However, Michigan executes a 6% sales tax in addition to the 19 cent gas tax.
Comparably, Illinois has a similar gas tax (19 cents per gallon) and a slightly higher sales tax (6.25%), resulting in a slightly higher state average.
Iowa, on the other hand, has a higher gas tax (24 cents per gallon) but no additional sales tax, and comes in under the Michigan and national averages.
In addition to state taxes, Michigan gas prices also reflect the fact that the state is at one end of a pipeline system that begins on the gulf coast.
Joanne Shore, the Team Leader of the Petroleum Division of the Energy Information Administration, says that although there are some closer refineries, much of Michigan’s gasoline arrives from refineries and refining centers on the gulf coast, including the PAD 3 Refinery.
Cross-country transport of the product can raise costs. And since Michigan is at the end of the delivery system, transportation costs are higher than they are for states positioned closer to the gulf coast, where much of America’s imported and domestic oil production enters the continental U.S.
In addition, AAA reports that the spike in this month's gas prices may be in part due to supply issues in the Midwest, primarily with the Enbridge pipeline in Wisconsin.
-Elaine Ezekiel, Michigan Radio Newsroom