Magnetic variations observed at Earth's surface are primarily caused by magnetospheric and ionospheric currents and secondarily affected by currents induced within Earth. For studies of space processes it is necessary to separate the internal contribution from the external one. In this paper we consider the Dst index which reflects the properties of the ring current. A spherical harmonic analysis is applied, using the axisymmetric assumption, to make the separation of magnetic data to external and internal parts. By examining 12 storms in 1997 and 1998, our results show that during the storm main phase the internal contribution to Dst is roughly 30%, after which it decreases to about 20% during the recovery phase. This is supported by an approximate model calculation of the induction in Earth. We also consider H variations at the four Dst observatories (Honolulu, San Juan, Hermanus, Kakioka) separately and at a typical continent station (Boulder) for comparison. It is seen that Kakioka systematically has the largest internal contribution during the storm main phase, while Hermanus has only a very small internal part at that time. The three other stations are closer to the ideal case (i.e., the internal part is roughly 1/3). As the anomalous behavior at Kakioka is thus opposite to that at Hermanus, their effects approximately average out in the computation of Dst. The differences between the stations are obviously due to differences in local ground conductivity structures. This conclusion is supported by investigating the Parkinson induction vectors which are larger at Kakioka and Hermanus than at the other observatories.