Advocate: Gas stations hurting as Illinoisans cross the border to escape high gas taxes

[March 31, 2022]  By Elyse Kelly | The Center Square contributor

(The Center Square) – As gas prices climb, state taxes have some Illinoisans running for the border.

In the Land of Lincoln, gas taxes are the second highest in the nation. Residents close to the borders are taking advantage of neighboring states’ lower rates. Currently, Illinois’ average gallon of fuel costs $4.49, according to AAA. In Wisconsin, it’s $3.95. Iowa’s average is $3.88 and Missouri is even cheaper.

Most of that difference is due to taxes. On top of a state gas tax, Illinois also allows local motor fuel and sales taxes.

Josh Sharp, president of the Illinois Fuel and Retail Association, said he’s heard from gas stations that they’re losing out on business to other states.

“If you live along the Missouri border here in Illinois, what’s a simple trip across the Mississippi River if you’re going to pay less than half in taxes than you paid in Illinois?” he told The Center Square.

It’s a big detriment to gas station business, according to Sharp.

“As their gallons go down, that means they’re selling less in-store items,” he said. “They’re selling [fewer] hot dogs, [fewer] lotto tickets, less food and beverage. You know those convenience store items that people like to purchase when they stop to fill up – they’re selling less of those as well. So, it really hurts those in-store sales, it doesn’t just hurt on the gasoline side.”
 

Jaw dropping prices have led to lawmakers proposing different solutions. Some are better than others, according to Sharp.

One proposal from the governor is to pause a future hike in the state gasoline sales tax, which Sharp pointed out wasn’t very helpful.

Another suggestion proposed by two Republican senators, capping the state sales tax on gasoline, did find favor with Sharp.

“At the pump, additional local and state taxes are added on,” he said. “What they’re talking about is just capping that at 18 cents and that would save motorists some real money because that would effectively pause the state sales tax.”
 

Apart from these measures, Sharp said he’s hopeful prices will get back to normal by the end of the year, but right now the U.S. is behind in oil production.

“The biggest thing that’s going to get us back to normal is refineries coming back online,” Sharp said. “A lot of them were shuttered, people were laid off by the thousands from the oil industry during the pandemic.”

The Russia/Ukraine conflict is affecting demand, but Sharp pointed out the main driver in that the industry is still playing catch-up from the pandemic, and people tend to forget that.

“The biggest thing that will guide us back to normal oil prices will be refiners going out, you know, extracting product from the ground, refining it into gasoline and us getting that out to consumers,” he said.

The industry has blamed President Joe Biden's new restrictions on drilling for the production woes.