Thursday, September 14, 2000

Indiana gas tax suspended again




By Mike Smith
The Associated Press

        INDIANAPOLIS — Gov. Frank O'Bannon extended the suspension of a state sales tax for a second time Wednesday because of another price spike at the pump and declining crude oil supplies.

        Suspension of the 5 percent sales tax was due to expire Friday night but will be extended through midnight Sept. 30.

        “I'm extending the sales-tax suspension until the end of the month as we watch the volatility and availability of crude oil and gasoline, ...” Mr. O'Bannon said in a telephone interview. “I feel that we're in a very difficult time here.”

        After Mr. O'Bannon first sus pended the tax on July 1, gasoline prices dropped to among the lowest in the nation. But in late August he extended the suspension until Sept. 16, saying it would give motorists extra savings through the Labor Day weekend and allow retailers time to prepare for the adjustment.

        But since Labor Day, prices have steadily increased and supplies have dropped in the Midwest, Mr. O'Bannon said.

        He cited industry analysts as reporting that supplies of crude oil in the United States are near their lowest level in 24 years, and down by 9.4 percent from their five-year average in the Midwest.

        Although prices in Indiana hit a low point of about $1.26 per gallon of regular unleaded on Aug. 7, the average price on Wednesday was $1.53, according to the American Automobile Association.

        The AAA put the average price per gallon at about $1.54 in Ohio and Kentucky, $1.56 in Illinois and $1.66 in Michigan. Hawaii had the highest prices, at $1.66 per gallon. Georgia was lowest at $1.42, and the national average was $1.57.

        The first 81 days of the suspension have cost the state about $28 million in revenue. It could cost another $6 million over the next 15 days.

        Mr. O'Bannon is relying on a 1981 statute allowing a governor to declare an “energy emergency” for up to 60 days and to extend it another 60 days.

       



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