Hoosiers should not expect
decline in gas prices
By Heather Mangold
City
Editor
Indiana motorists should not expect a significant
decline in gasoline prices this summer, according to energy experts.
According to a report released by the United States
Department of Energy, the average gasoline price for the summer is $1.49
per gallon. Prices are expected to reach a peak in the month of June
at $1.52 per gallon. However, the department suggests that the price
will decline by December.
Many Hoosiers may remember the hike in gas prices
experienced throughout Indiana last summer. Gov. Frank O'Bannon implemented
a five-percent sales tax relief for gasoline in Indiana, but this year,
O'Bannon has not expressed any desire to repeat the tax break.
Jennifer Dunlap, a spokesperson for O'Bannon, said
that the same triggers that allowed O'Bannon to enact the tax break
last summer are not in place now.
Last summer, Indiana was at a greater economic
disadvantage than compared with other states. In addition, a fuel shortage
was a contributing factor in O'Bannon's decision to reduce the sales
tax.
While the triggers that allowed O'Bannon to implement
the tax relief last summer are not present today, the economic situation
throughout Indiana is not entirely blameless.
Greg Seiter, media relations manager for AAA Hoosier
Motor Club, said there are many factors that contribute to fluctuation
in gasoline prices.
The price of crude oil is one
factor. Seiter said the price of crude oil counts
for nearly 70 percent of the pre-taxed price of gasoline. Over the last
two to three weeks, the price of crude oil has reached $28 to $29 per
gallon. This is a three to four dollar increase per barrel from last
March when one barrel of crude oil cost $25.
"That's a huge difference, even if it may not seem
like it," said Seiter.
In addition to rising crude oil costs, early warm
weather in Indiana could be to blame.
"Early weather brought more cars out, thus increasing
the gas demand," said Seiter.
While an increase in demand for gasoline has recently
taken place in Indiana, a decrease in supply has become an issue as
well.
The Organization of the Petroleum Exporting Companies
(OPEC) has been ordered to cut back its oil production by 2.5 million
barrels per day.
Another reason that supply may be diminishing is
due to the closing of an oil refinery in Blue Island, Ill. The shut
down could degrade regional supply flexibility, including Indiana, according
to the department's report.
Seiter said that theoretically, in June, gasoline
prices are expected to level off, halting the ongoing increase of cost.
However, because there are so many factors that contribute to the cost
of gasoline, no one can be sure, said Seiter.
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