SOUTHFIELD, Mich. (WXYZ) — Gas prices are skyrocketing due to Russia’s invasion of Ukraine and the resulting sanctions. Some are asking whether a gas tax "holiday" could help drivers.
“It’s crazy,” said Gawain Mandeville, a driver WXYZ spoke to as he filled up in Dearborn. “It is eating into profits.”
Mandeville says he is working as an Uber driver and as a result especially feeling the impact of the gas prices.
So what are the taxes paid at the pump?
The Michigan Petroleum Association says here is how it breaks down. As of Monday morning, the average wholesale price for a gallon of regular unleaded in the state of Michigan was $3.25 a gallon, plus 18 cents in federal tax, 27 cents in state motor fuel tax, and 21 cents in sales tax. That brings the base cost for gas stations to $3.90 a gallon.
“We are not making money on gas,” said Jon Ahmad, a Dearborn BP Gas Station Worker.
Ahmad says the station he works at is selling gas for $3.89 a gallon, slightly below cost. It is a loss-leader, aimed at attracting customers into the store to buy products with higher margins.
“Low-cost gas to get busy,” he says.
“It is very stressful,” said Jim Hamade, who owns the Marathon at Lahser and the Lodge.
Hamade says when gas prices are high, people buy less in store.
As a result gas station owners are intrigued by the idea some state and federal lawmakers are discussing. While gas taxes fund schools and road repairs, Michigan Petroleum Association President Mark Griffin says some state lawmakers have reached out to him asking his thoughts about a temporary state gas tax holiday.
“I think it is probably a good idea to do whatever we can to try to mitigate the effects of the worldwide crisis we are in right now,” said Griffin.
State lawmakers have not introduced any bill that would result in such a tax holiday. Seven Action News reached out to the White House and Governor Gretchen Whitmer’s Office for comment on the idea, but they did not respond.
“It is continuing every day going up. If it continues with this trend we could see $5 soon,” warns Hamade.
Industry insiders predict gas prices could reach $5 in the near future, and if trends don’t change, perhaps even $6/gallon by summer.