Gas prices have spiked this week throughout Indiana, having gone from a state average of $3.34 on Jan. 27 to $3.56 on Wednesday. Patrick DeHaan with GasBuddy.com told WKVI that the spike could be attributed to three major factors including refinery maintenance, rising crude oil prices, and the idea that the economy is improving.
DeHaan said that the cost of crude oil was around $85 in early December, but has since raised to $98 per barrel – a 14 percent jump, DeHaan said, and it’s defintely not helping. He said the rising cost of crude oil is due in part to a newly-opened pipeline that allows accumulated oil inventory to be sent out toward other parts of the country, raising the demand.
Further, he said refineries typically use this time of year to perform maintenance on their equipment, which he said causes lower outputs which can affect the price of gas. On top of that, speculators are taking the rising stock market as a sign that the economy is improving, pushing them to invest in gasoline and crude oil futures, further pushing up the price of gas.
“Also what we’re seeing is possible sentiment regarding the economy. Stock markets are close to all-time highs; the economy is doing better – the perception is there that that will lead to higher consumption of gasoline in the months ahead, and that’s also putting upward pressure on prices. So, quite a few factors aligning right now,” DeHaan said.
Fortunately, DeHaan said he doesn’t expect this spike to last too long. He said he hopes the prices will drop back down in a few weeks, calming down toward mid-February, but he expects prices to fluctuate between $3.35 and $3.75 per gallon. He said he doesn’t expect any large spikes in price to occur until late March through April or early May, coinciding with the release of summer-blend gasoline.
“My concern becomes, ‘What’s going to happen in late March and April?’ That’s when we really see a lot of changes. We start to see refineries producing summer gasoline, as well as getting rid of whatever they have for winter gasoline, as winter gasoline can no longer be sold after a certain date. So, there will likely be additional volatility in the days ahead. I don’t see an end to this volatility for quite some time,” said DeHaan.