The retail price of gasoline throughout the state of Indiana continues to decline at a rapid pace, having dropped from an average of $4.20 on June 6 to $3.57 on June 25, but how long can we expect these prices to continue to fall? According to Patrick DeHaan, senior petroleum analyst at GasBuddy.com, prices should continue to drop for a few weeks, but he said with hurricane season approaching, weather could become a problem.
“Outside of normal fluctuations and normal supply and demand factors, one of the bigger issues that can impact prices tends to be hurricane season, and that may disrupt the flow of oil into the country. There are a lot of oil rigs in the Gulf of Mexico that produce oil as well as many refineries that produce gasoline for the Gulf, and if any of that infrastructure becomes disrupted, we could see an impact here in the Great Lakes, although it would have to be a major storm,” DeHaan explained.
On top of the quickly dropping gas prices, many Hoosiers have begun to notice another trend; that is, some cities or towns in the Kankakee Valley will have prices that are 10 cents or more higher than neighboring towns, leaving many people wondering why gas stations that are less than 20 miles away would have such different prices.
“Quite simply, competition impacts the price of gas. If one community has a gas station that’s not as interested in dropping prices, well, nobody really has incentive to drop prices. Gas stations make more money when prices are higher, and so if there’s nobody really leading prices down in one community – there may be in another community – that’s going to have an impact on the price of gas,” said DeHaan.
Another circumstance that is worrying DeHaan is the fact that the retail price may be dropping too quickly. While the wholesale price of gasoline is dropping steadily, the retail price is decreasing faster and that could cause issues down the road.
“Retail prices continue to drop at least three cents every day for the last couple of weeks, it seems like. Meanwhile, wholesale prices have only been going down a penny or two, so we’re eventually approaching the day that retail prices will have caught up to the massive decrease in wholesale prices and that could lead stations to have a thinner margin; it could lead, perhaps, to slight increases down the road – nothing near what we saw earlier this month,” said DeHaan.
DeHaan said he expects the average price of retail gas to stay in the low-to-mid $3 range for the next week or two.