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Gas Prices Are Especially Low In Ohio, But Why?

Towards the end of the year in 2008, gas prices dipped to a similar low.  oil gas pump price
Nicholas Eckhart
/
Flickr/Creative Commons

The price of gas is at a new low this week, with Ohio’s average around $1.99 per gallon, down about 80 cents from last month and down about $1.38 from the 2013 average.

Low gas prices are a reality all over the place, but they vary significantly from county to county and state to state, with Ohio coming in fifth in the country for least expensive gas right now. The national average is around $2.27, but some of Ohio’s closest neighbors are among the priciest, with Pennsylvania averaging around $2.58 and West Virginia at $2.46. On the western and northern fronts, Indiana and Michigan are competing with Ohio for extra-low prices at the pump.

One reason for that difference is taxes—they’re around 8 cents more on the gallon in West Virginia and 14 cents more in Pennsylvania, according to the American Petroleum Institute. But Patrick DeHaan with GasBuddy dot com says Ohio, Michigan and Indiana all have extra-competitive markets in general.

“It’s a very cut throat business in those states,” says DeHaan. Pennsylvania and West Virginia have less competition from station to station, and they also have more expensive sources: most eastern states are dependent on imported crude, while here the crude comes by pipeline from Canada or Texas to midwestern refineries.

Still, the overall drop in prices is global, and that’s due to a few factors: first, the shale fields in Texas and North Dakota have upped U.S. production enough to make the U.S. the number one oil-producing country in the world. The U.S. doesn’t export crude oil, but the increased supply here means more crude is staying behind in other oil-producing countries. Second, the global economy is still weak, which keeps prices down.

Finally, in November the Organization of Petroleum Exporting Countries (OPEC) failed to come to an agreement about limiting production among its members, which is its usual way of controlling global prices. The next scheduled OPEC conference isn’t until June, so prices are a race to the bottom for the foreseeable future. Oil producers around the world are hoping that eventually U.S. production will react to the dip by slowing down.

Lewis Wallace is WYSO's managing editor, substitute host and economics reporter. Follow him @lewispants.