Gas prices in Indiana were expected to shoot up Tuesday afternoon, to as high as $3.25 per gallon for the state average. Patrick DeHaan, senior petroleum analyst for Gasbuddy.com, attributes the sudden jump in price to “price cycling”.
“Prices have been going down really since the beginning of September. They last jumped on Aug. 30. For the last two weeks, prices have ignored slight increases in the wholesale price of gasoline,” said DeHaan.
That’s part of how price cycling works, which DeHaan said is unique to the Midwest. He called it a marketing strategy where stations ignore trends in oil and wholesale gas prices for weeks, usually about two weeks at a time.
“Stations instead choosing to undercut each other almost every day until they run out of margin. That’s when prices shoot back up.”
DeHaan said Hurricane Ida is still having an effect on prices across the country, while Nicholas has had little effect.
“Ida is still resulting in the shut down of millions of barrels of oil production in the Gulf of Mexico,” he said. “Still about 50 percent of offshore oil production in the Gulf of Mexico is offline and that is what’s impacting prices,” he said.