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Michigan gas prices are up again. Here is why.

gas pumps
Michigan is among the states with the highest gas prices. The cost of unleaded gas hit $4.34 per gallon on October 6, 2022. (fitri iskandar zakariah / Shutterstock.com)
  • Michigan’s average gas price increased by 10 cents overnight 
  • Several factors, including distribution and a refinery fire, are raising Midwest gas prices
  • Experts are uncertain when prices will decline

Michigan's gas prices, up about 17 cents a gallon over last week alone, continue to rise. 

Regular gas was $4.34 in Michigan on Thursday, a 10-cent increase compared to Wednesday and 48 cents higher than the national average of $3.86. According to AAA reports, drivers are paying 51 cents more today than the September average. 

After months of declining gas prices, experts warn drivers should prepare to pay more at the pump throughout the week. 

Related:

What you need to know about gas prices:

Why do gas prices fluctuate?

The cost of crude oil, refinery processing, distribution, marketing and taxes impact gas prices. 

The price drivers pay at the pump reflects those costs as well as profits that refiners, marketers, distributors, and retail stations seek. 

Gas prices fluctuate when disruptive events, such as war or increased demand, impact oil and gas supplies. 

Why did gas prices increase so much this year?

Matthew Ross, a Western Michigan University assistant professor of finance, said the two main drivers of this year's high gas prices are the war and capacity limits. 

Ross said that Russia is a significant exporter of crude oil and refined petroleum. And the European Union, United States and Canada’s sanctions on Russia for invading Ukraine impacted those gas supplies.

U.S. refining capacity, the amount of crude any given refinery can process in 24 hours, is another factor. 

"There is less capacity now than at the start of the COVID-19 pandemic," Ross said. 

OK, why are Michigan's gas prices among the highest in the nation?

Michigan and other Midwest drivers are paying more at the pump for several reasons. 

A refinery in Ohio from which Great Lakes states import fuel caught fire two weeks ago, said AAA spokesperson Adrienne Woodland. 

"That's what initially sent prices up," Woodland said. 

Crude oil prices — which comprise about 50 percent of the cost drivers see at the pump — are also increasing because of oil-supply concerns. 

Fuel costs rose when news spread that OPEC could trim oil production by 2 million barrels to shore up prices. 

"When oil prices rise, typically, so do gas prices," said Nicole Peterson, a spokesperson for Gasbuddy. "We expect most states that have seen prices stabilize recently will experience a 10 to 20-cent per gallon increase over the next two weeks."

Another disruption was Hurricane Ian, which shut down 11 percent of the Gulf of Mexico's oil production last week, according to the U.S. Bureau of Safety and Environmental Enforcement. 

How high did gas prices get in Michigan this year?

President Joe Biden announced a U.S. ban on Russian oil in response to the deepening conflict between Russia and Ukraine. Afterward, gas prices soared to a record-high $5.22 per gallon for unleaded gas on June 11. 

After that high, Michigan's gas prices declined for 10 straight weeks

What is a gas tax holiday? 

On June 22, President Biden urged Congress and governors to temporarily suspend their excise taxes on gas, giving consumers a gas tax holiday. 

"Many states, including Florida, most recently, have already seen (gas tax holidays) go into effect and reduce prices," Peterson said.

Some Michigan lawmakers tried to pass legislation pausing the state's gas tax. However, Gov. Gretchen Whitmer vetoed the legislation in March, saying it would deprive the state of funds for road repairs. 

"Suspending those taxes might be popular with voters ahead of midterm elections. Unfortunately, roads in the U.S. are not generally in great shape. Roads cost money to maintain, so cutting funding is problematic over the long term," said WMU’s Ross. 

Can drivers expect gas prices to go down soon?

"We're at the point where we have to wait and see where demand goes within the next week," said AAA’s Woodland. 

Fuel demands are typically lower in the fall than during summer travel season. However, Woodland said, refinery capacity and oil supplies would need to increase to drive prices back down.

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