GaBuddy: Pump prices likely to increase soon

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Image by IADE-Michoko from Pixabay

Gas prices are expected to increase this week in Indiana and other states across the Midwest. That is due to a behavior called “price cycling.”

Price cycling is when gas stations undercut each other on price to gain business. When retail gas prices approach the wholesale cost of gasoline, a more-dominant station will increase its prices. Other gas stations then follow suit, which resets the cycle.

“Oil prices continue to creep up. Wholesale gas prices are now nearly 20 cents per gallon higher than they were a week ago. By all metrics, there is a price hike coming. In Indiana, I think we are close to seeing prices go back up to maybe $3.20. We could even see some stations get to $3.29 per gallon this week,” said Patrick DeHaan, head of petroleum analysis for GasBuddy.

Filling up as soon as you can isn’t a bad idea.

“That would certainly be my guidance. I do expect that prices would go up this week. Whether that happens today, tomorrow, or Thursday is really up in the air. Over the course of a year, it appears Mondays and Thursdays are the days where we tend to see these price cycles happen, but that’s all subject to change,” said DeHaan.

DeHaan says the likelihood of seeing prices at $4 per gallon in 2022 is realistic.

“As you saw last year, the national price of gasoline started out at $2.25 per gallon. Here we are in 2021 at almost $3.25. If it is another year like this year, we could certainly see $4 per gallon,” said DeHaan.

DeHaan is also monitoring a situation going in Libya.

“Some bad news that may be contributing to the higher prices is that Libya is seeing a slash in oil output because of a civil war that’s happening there. It’s disrupting oil shipments. Libya is a large oil producer. What happens in Libya can have an impact on global oil prices,” said DeHaan.

DeHaan urges you to shop around because you can probably still find stations across Indiana that are selling gas for under $3 per gallon.

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