CWRU Economics professor explains why Ohio is not protected from supply chain gas price surges

Ohio's refineries churn out 600,000 barrels a day but gas prices continue to surge across the...
Ohio's refineries churn out 600,000 barrels a day but gas prices continue to surge across the state.(WOIO)
Published: Jun. 17, 2022 at 7:25 PM EDT
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CLEVELAND, Ohio (WOIO) - Gas prices are high enough these days without watching prices in Ohio surge past those in Pennsylvania where the Keystone state deals with a state tax on a gallon of gas that is 19 cents a gallon higher than in Ohio.

That however was the case last week as the price of a gallon of gas in Ohio surged well past the national average and was ultimately blamed on supply chain issues at the refineries that serve the state.

However, a quick check revealed that there are 4 refineries in the state, including one in Canton, and together they are able to process 600,000 barrels of crude, a day, which makes the state the sixth largest in the nation when it comes to refining capacity.

With that type of capacity, you might be under the impression that supply chain problems should not be a problem for consumers in the state of Ohio when it comes to gas price volatility.

Not true, according to Case Western Reserve University Economics Professor Jonathan Ernest

“It doesn’t necessarily mean because you have a refinery here in your backyard that you have really cheap gas that you can use as you like and buy for pennies,” Ernest said, “You’re really still competing with shipping that gasoline to other states and other stations and if they’re willing to pay more for it, than it’s going to ship there instead of just across the street from the refinery.”

Also, while Ohio’s refining capacity may seem impressive it is dwarfed by the capacity in Texas and Louisiana.

Ernest does

“What’s likely going on is we’ve just had so much variability in gas prices lately that they’re trying to figure out what that price should be to balance out demand and supply,” Ernest said.

Ernest said that supply and demand playback is just part of what is driving gas prices and we won’t see a pullback until multiple factors improve.

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