The Herald Bulletin

Morning Update

Local Business

October 23, 2013

Competition causes local gas prices to 'cycle'

Officials say prices will fall as weather gets colder

ANDERSON, Ind. — The topic of gasoline prices tends to draw strong opinions, especially when the going rate varies from county to county, city to city and state to state.

“I don’t care what they say,” Barb Haynes of Anderson said about gas prices. “That’s price gouging.”

On Wednesday, gas prices around the city were between $3.39 and $3.49 a gallon. Those prices are down almost 10 cents from Monday, when prices were $3.49-$3.55 a gallon. In the Indianapolis, Carmel and the Fishers area, gasoline is selling for $3.21-$3.29 a gallon. And the national price for fuel varied from a low of $3.02 a gallon in Missouri to $4.11 a gallon in Hawaii.

Patrick DeHaan, senior petroleum analyst at GasBuddy.com in Chicago, said the irregularities in gas prices are often attributed to fierce competition between gas stations.

That competition results in "price cycling," which starts when stations slash prices to undercut local competitors. Before long, the gas station is selling its fuel for less than what the it paid.

According to DeHaan, consumers can see prices jump 20-30 cents in a day when retailers stop operating at a loss and start to sell gasoline at a profitable price.

“One of them says, 'Enough of this – I’m not making money,'” DeHaan explained. “When that happens, prices tend to jump very quickly.”

Price cycling can create rates that vary according to state, region or community.

Indiana is sometimes cited as the most volatile state when it comes to gas prices, with Ohio and Michigan close behind, DeHaan said. On average, he said, gas prices in Indiana move up or down each day by about two cents.

He stressed common sense, noting that when gas prices spike, people should buy only what they need, secure in the knowledge that prices will soon fall.

Scot Imus, director of the Indiana Petroleum Marketers & Convenience Store Association in Indianapolis, said it is unfair to take a snapshot picture of gas prices in a community on any one day and then compare it to other communities.

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