Kentucky and Indiana have taken recent steps to address rising gas prices, with Kentucky cutting its gas tax and Indiana extending a suspension on taxes, according to a May 14 report from WCPO. Michael Jones, associate professor of economics at the University of Cincinnati’s Lindner College of Business, discussed how these actions could affect gas prices in Cincinnati.
Jones said that all consumers are experiencing higher prices regardless of their state. “Regardless of the state that you’re in, every consumer is facing the higher prices,” Jones told WCPO. “So governors are naturally trying to come up with ways to alleviate some of that price pressure for consumers.”
He also explained that even if Ohio does not enact similar tax relief measures, Cincinnati may still benefit from lower gas prices due to changes in neighboring states. “Cincinnati is going to benefit. We’re going to be able to free ride on the lower gas prices in Indiana,” he said. “And we’re not going to suffer the consequences either, because Indiana is going to lose that tax revenue that comes rather than the state of Ohio.”
According to Jones, Ohio gas stations near state borders might reduce their own prices in order to remain competitive with stations across state lines.
The broader implications suggest that regional policy decisions can influence local markets even without direct action by all states involved.