That trend might continue, too. The U.S. Energy Information Administration expects the average price for a gallon of gas to dip to $3.03 by 2017, thanks to lower crude oil prices and lower demand.
That’s good news for consumers, but still a far cry from the $2.35 average price in 2009. The nation’s high mark for a gallon of gas was 2012, when it averaged $3.61, according to AAA. Last year’s average was $3.49.
Volatile prices
The price for gas pumped into those vans fluctuates dramatically in the Midwest, where wild swings led to a Federal Trade Commission investigation in 2010 and 2011. The FTC concluded in May 2011 that the up-and-down prices do not harm consumers and found that such “price cycling” is “generally a phenomenon of the upper Midwest.”
“Our analysis is the first, however, to detail when cycling started, mid-2000, and that it continues unabated. We find consumers are better off on average in cities after they began cycling. … This finding is consistent with the hypothesis that price cycling is a form of retail price war.”
Gregg Laskoski, senior petroleum analyst for GasBuddy.com, said gas prices in the region went up by 30 cents in a single day in 2013. In Fort Wayne, Ind., prices increased 34 cents in one day. Outside the region’s seven-state footprint, the largest one-day change was 14 cents, in Lubbock, Texas.
“You’re in a region where there’s more price volatility than anywhere in the country,” Laskoski said. “You see price jumps that are incredible. It’s created and perpetrated by the dominant retailers. They have huge spikes and come down. Once they hit the floor they go way up. It’s got to be extremely frustrating for consumers.”
Laskoski expects the trend to continue in the region. Last month, the U.S. average price for a gallon of gas floated within a 7-cent range. Cincinnati’s average price per gallon fluctuated by roughly 40 cents.
Jamal Kheiry, spokesman for Marathon Petroleum Corp., based in Findlay, said the price moves in the Midwest are influenced by many factors, including the price of crude oil.
“The retail gas market is extremely competitive,” he said. “You have different factors and costs and it could be any number of those factors.”
Gas taxes
Taxes add to the price motorists pay at the pump. The federal gasoline excise tax has been 18.4 cents per gallon since 2007. Meanwhile, states charge a wide range of rates. In Ohio, it’s 28 cents, which brings the total tax on a gallon of gas to 46.4 cents, the lowest in the region.
Pennsylvania raised its gas tax last week and it now totals 60.2 cents per gallon, one of the nation’s highest rates. Taxes in other neighboring states: Michigan, 57.7 cents; Indiana, 56.6 cents; West Virginia, 53.1 cents; Kentucky, 50.7 cents.
According to GasBuddy.com, 2013 might mark the first year for increased demand of gasoline since the peak year of 2007. That year, gasoline demand averaged 390 million gallons per day, compared to 365 million gallons in 2012.
More than 130 refineries nationwide must make their more expensive summer blends available by May 1, which means higher prices in the spring.
“They shut down enough of their production that it creates a tighter supply of gas in February, March and April,” Laskoski said. “It’s like clockwork.”
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