State extends gas sales tax suspension

Gov. Frank O'Bannon announced Tuesday he would extend his suspension of the state's gasoline sales tax for 20 days, a move that is saving Hoosiers up to a nickel at the gas pumps.\nO'Bannon returned Tuesday to the Indianapolis Shell station he had used as the backdrop for the June announcement declaring an energy emergency and suspending the tax for 60 days.\n"Two months ago, I came here to take action to help Hoosier families and businesses deal with the high prices of gasoline," O'Bannon said.\nWhat worries the governor is a possible surge during Labor Day weekend and the refinery switch-over to heating oil production, Reed said.\n"We think that there's some indication there may still be a problem," she said.\nO'Bannon has the option of lengthening the current suspension for 40 more days if there is a significant supply shortage and prices can adversely affect the state's economy.\nWhen gasoline prices surged in Indiana and became among the highest in the nation, O'Bannon suspended the gasoline sales tax in time for the Fourth of July holiday weekend.\n"Traditionally, holiday times ' Fourth of July and Labor Day ' are high traffic times, and we wanted to make sure we didn't exacerbate that situation," said Cheryl Reed, a spokeswoman for O'Bannon.\nThe suspension coincided with market factors that caused a drop in gasoline prices. Instead of the 6 to 8 cents per gallon prediction for the drop, prices plummeted, making prices in Indiana among the cheapest in the nation.\n"I don't know that Indiana is normally the lowest in gasoline in the nation," Reed said. "There is no magic price number. What our problem was back in June was our price was disproportionately higher and that does not normally happen in Indiana."\nThe initial surge in pump-price was caused by several factors Reed, said, including a 10-year low in gasoline supply. Reed also said the surge can be partly blamed on refineries switching over production for a reformulated gas.\nShe also said had the initial surge continued for one year, one study suggested 17,000 Hoosiers would have been forced out of work.\nIf the current state of emergency expires and the surge returns, the governor may issue a new 60-day state of emergency, with an optional extension of up to 60 days.\nBut the current prices just below $1.40 per gallon are making Indiana residents happy, Reed said. She said few residents have suggested the governor lifted the tax as a political measure for the up-coming election.\n"The Governor's response to this is clear," she said. "If this had happened in his first year, he would have (suspended the tax). If this had happened in his second year, he would have done this. If this had happened in his third year, he would have done this. It just so happened that it came in his fourth year."\nThe Federal Trade Commission and Indiana Attorney General Karen Freeman-Wilson are investigating the surge in gas prices.\n"The federal government subpoenaed a lot of information from oil companies," Reed said, but she added that no date has been set for a report of findings or a release of that information.