Indiana Gas Prices Post Largest Weekly Jump in Nation as Tax Holiday Decision Looms

Indiana drivers were hit with the sharpest weekly increase in gasoline prices in the United States in late April, with the statewide average jumping 84 cents per gallon. The surge, which pushed prices to nearly $5.00 in some areas, comes just a week before Governor Mike Braun must decide whether to extend a temporary suspension of the state's 7% sales tax on gasoline, which is set to expire on May 8. According to data from GasBuddy, the 84-cent increase in Indiana far outpaced other states that saw significant jumps, including Michigan, which rose by 72 cents, and Ohio, by 60 cents. The spike brought prices at some stations in Indianapolis and northeast Indiana to $4.99 per gallon by April 29. The national average also climbed, reaching approximately $4.23 per gallon, according to AAA, its highest point in nearly four years. The dramatic price increase is attributed to a combination of global and local pressures. International crude oil prices climbed to $126 per barrel, surpassing the peak reached during the 2022 invasion of Ukraine, amid escalating conflict involving Iran and a U.S. blockade in the Strait of Hormuz, a critical channel for about 20% of the world's oil supply. Compounding the issue for the region, the BP Whiting Refinery in northwest Indiana experienced unplanned outages, tightening fuel supplies across the Midwest. In response to rising prices earlier in the month, Gov. Braun signed an executive order on April 8 instituting a 30-day suspension of the state's 7% sales tax on gasoline. The governor has the authority to suspend the tax for up to 60 days if he determines a fuel shortfall exists. The initial 30-day period concludes on May 8, at which point he will announce whether the tax holiday will be extended. Indiana is one of the few states that applies a sales tax to gasoline purchases. The tax is calculated monthly by the Indiana Department of Revenue based on the statewide average retail price. Before the suspension, the tax stood at 17.2 cents per gallon in April. The department announced that without the governor's intervention, the rate for May would have jumped to 23.3 cents per gallon due to the higher underlying fuel costs. Even with the sales tax holiday, Hoosier drivers still pay a significant amount in other taxes at the pump, including a 36-cent-per-gallon state excise tax and the 18.4-cent-per-gallon federal gas tax. These taxes, particularly the state excise tax, are a primary funding source for Indiana's road construction and maintenance projects, creating a difficult trade-off for state officials between providing consumer relief and funding essential infrastructure. The governor's move has been politically popular, particularly among Republican state senators who had called for a moratorium. However, some Democratic lawmakers have argued the relief does not go far enough. State Rep. Greg Porter, the ranking Democrat on the House Ways and Means Committee, called on Braun to also suspend the 36-cent excise tax, which he argued would provide more substantial savings. Suspending the excise tax, unlike the sales tax, would require approval from the state legislature. To monitor the situation, the Indiana Attorney General’s Office recently launched IN Fuel Watch, a program that tracks fuel prices multiple times per day across the state. For small and mid-sized businesses, particularly those reliant on transportation and logistics, this level of price volatility creates significant operational headaches. While the governor's tax holiday provides some temporary relief at the pump, it introduces another layer of uncertainty into financial forecasting. Business owners cannot build a stable budget around month-to-month political decisions. In our experience, reacting to market swings is a losing game; proactive financial management is essential. Fuel is a major, non-discretionary expense, and navigating these spikes requires a sophisticated approach to cash flow management and cost control that goes far beyond simply hoping for lower prices. This is precisely the kind of complex challenge where our outsourced CFO services provide critical support, helping companies build resilient financial strategies. To learn how to better manage cost volatility, business owners can contact C&S Finance Group LLC at csfinancegroup.com. With the May 8 deadline fast approaching, businesses and consumers across Indiana are watching closely for Governor Braun's decision on a potential extension of the tax holiday. Regardless of the outcome, underlying market forces, from international geopolitical tensions to regional refinery operations, will continue to be the primary drivers of fuel costs for the foreseeable future.