Gasoline prices fuel perception

2013-07-02T17:00:00Z 2013-07-03T22:42:05Z Gasoline prices fuel perceptionAndrea Holecek Times Correspondent nwitimes.com
July 02, 2013 5:00 pm  • 

Despite a common perception, gasoline prices don’t skyrocket just because it’s Independence Day or any other summer holiday, experts said.

Gasoline prices have dropped an average of 25 to 30 cents a gallon in recent weeks, but some drivers expect them to jump as we celebrate the Fourth of July. Gas prices already were starting to spike in Northwest Indiana by Tuesday afternoon. One station in Valparaiso rose from $3.29 a gallon to $3.59.

“I’m sure it (gasoline price) will go up,” said Eric Kersten, of Crown Point, as he filled up his tank at a Dyer gasoline station Monday. “It’s all a scam.”

Others agreed.

"They have them go up because they know people are driving more," said Arturo Cantu, of Sauk Village.

But calling the opinion a “conspiracy theory,” Patrick DeHaan, senior petroleum analyst for GasBuddy, said gasoline prices go up and down with crude oil prices and supply and demand rather than the day of the week or an upcoming holiday.

Average gas prices were $3.45 a gallon in Northwest Indiana early Tuesday compared with $4.01 a month ago, according to AAA's Fuel Gauge Report.  

Although prices may rise before, during or immediately after the holiday, it would be because of “normal market volatility,” DeHaan said.

“It (the price of gasoline) doesn’t have anything to do with the holiday,” he said. “It would be a mere coincidence if prices increased.”

Gasoline becomes more “price sensitive” during holiday period, he said.

“Right before the holiday people shop for gas,” DeHaan said. “They know they have to fill up and keep watching the prices. The fact is, the price of gasoline goes up and down on a regular basis.”

Beth Mosher, spokeswoman for the AAA Chicago Motor Club, said many people believe there is a general conspiracy among gasoline stations owners to hike prices during holiday periods.

“There may have been a time in the past when prices would go up, but only because of the demand for gasoline peaks in the summer months when people travel more,” she said.

Scott Imus, executive director of the Indiana Petroleum Marketers & Convenience Store Association, said rather than boost prices, gasoline retailers normally drop prices for holidays to attract customers to their stations.

A study of gasoline prices during the summer holidays from 2007 through 2012 shows prices actually dropped in five of the six years, Imus said.

“In most cases retailers were selling fuel below their cost,” he said.

Records indicate that between 2007 and 2012, retailers were actually selling fuel below cost for four of the six years, he said.

“If you’re a retailer you want to price aggressively because there are a lot of people on the road,” Imus said. “They hope drivers will buy gas because of the price, but they hope they may buy other things as well. You want traffic in your stores.”

Indiana retailers made an average profit of 9.8 cents a gallon on fuel sales in 2012, but factoring in the cost of a credit card transaction, margins fell to 1.5 cents a gallon, the second lowest in the nation, Imus said.

In Illinois, retailers’ 2012 margin was 14.9 cents a gallon — not including credit card transaction costs — ranking the state 41st lowest nationwide.

Unless crude oil prices spike or there is a supply disruption, local gasoline prices should remain in the mid-$3-a-gallon range, said DeHaan, Imus and Mosher.

“I think we’ve been pretty much conditioned to that,” Imus said. “That’s pretty much where things have settled. It equates to $90 to $100 a barrel crude oil prices.”

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