Gas prices are likely to increase this week in Indiana and the Midwest, but stations may not bump them up all that much.
GasBuddy says the average in Indiana is $2.96 per gallon, which is down a penny from where it was this time last week.
“I think stations are probably going to go up to that $2.99 mark. I know that they are resistant to hit $3, so I think they’ll go up to $2.99 and hold that line. They don’t want to do it unless they absolutely have to,” said Patrick DeHaan, head of petroleum analysis for GasBuddy.
DeHaan said Indiana appears to be due for a “price cycle.” The process of price cycling is basically a neighborhood price war driven by nothing but competition. For example, one station drops their gas prices, then others follow to see who can offer the lowest price. Eventually though, one company throws in the towel, and all prices snap back up. DeHaan has a projection of when that could happen.
“If it was me, I’d probably look to fill up around Wednesday or Thursday morning. Wholesale gas prices are down about three cents per gallon across the Midwest, so that may give us enough breathing room to get to Wednesday or Thursday without a hike,” said DeHaan. “What we’re seeing right now is on par with what we saw in 2018 when prices nationally reached $2.97. At this time this year, we’re a little bit higher at about $3.03.”
DeHaan pointed out that there are several things driving up gas prices right now.
“This really has everything to do with the fact that the economy is reopening and people are hitting the roads and filling up much more often. The only reason the national average got over $3 per gallon last week was because the outages in the Colonial Pipeline boosted gas prices in areas of the southeast by 15 to 20 cents per gallon,” said DeHaan.
The Colonial Pipeline was recently shutdown because of a cyberattack, but it is back up and running. Even though Indiana and the Midwest have not been affected by the gas shortage, other states the pipeline serves will continue to deal with the shortage in the coming days.
“A lot of this is just catch up. I would expect more meaningful increases in stations that have fuel in the next 24-48 hours. Still, the resolution in the southeast one to two weeks to fully fix, if not three weeks in some of the hard hit areas,” said DeHaan.
DeHaan says panic buying hasn’t helped.
“Based on the numbers, you can see that panic buying is slowing down, but it is not completely gone yet. Until it’s gone, it’s going to be tough for areas that were hit pretty hard,” said DeHaan.
The Colonial Pipeline does not serve Indiana, but it does serve most of the southern states, and branches from the Atlantic Coast to Tennessee.