The Latest on Gas Price Volatility in Indiana and Elsewhere
- Indiana has the cheapest gas prices thanks to a tax holiday, but this could end if the Iran deal falls through.
- US oil reserves are at their lowest since the 1980s, and further depletion could drive up prices if the Iran deal fails.
- Consumers should watch oil prices closely and fill up if the Iran deal unravels, but prices may fall if the deal goes through.
STATEWIDE–Gas prices went up in Indiana this week, but they still remain well below the national average. That’s the sentiment from GasBuddy’s Head of Petroleum Analysis Patrick DeHaan.
“Indiana is still the place to be with the cheapest gas prices, thanks to its extension of the use tax holiday. And the excise tax holiday continues, at least for now, until July 7. That is contributing to Indiana’s prices being much lower. Now, we could see even lower prices in the days ahead, if the deal with the US and Iran to reopen the Strait of Hormuz materializes,” said DeHaan.
If the deal with Iran falls apart, DeHaan says that could lead to even further price increases.
“So, really, the next couple of days, very pivotal for where we go moving forward. Whether gas prices go up, oil could shoot right back up if this deal falls apart. The reason for that is that while a deal may be imminent, the president’s touted it, US strategic oil reserves have fallen to their lowest since 1983. Oil inventories in Cushing, Oklahoma, which is the delivery point for the NYMEX contract, have fallen to their lowest since 2014. And oil inventories in developed countries, the OECD countries, have fallen to their lowest since 1990. So, the fundamentals look really bad. Global oil supplies are down significantly. If this deal doesn’t happen, it’s going to mean likely higher oil prices. If it does happen, well, we could see more sub-$3 prices popping up in areas across Indiana in the weeks ahead,” said DeHaan.
The U.S. Strategic Petroleum Reserve (SPR) is now at its lowest level since the early 1980s.
“The SPR releases are going to be continuing into the latter half of the summer. In fact, maybe by Labor Day, they’ll wrap up. So, indeed, US strategic reserves are continuing to be depleted as this is all happening. And that is why, if this deal doesn’t materialize, we could eventually see oil prices going up much more dramatically as the US continues to drain its strategic reserve,” said DeHaan.
DeHaan weighed in on when Hoosiers should fill up.
“I think you watch the price of oil. If this deal unravels, you probably are going to want to fill up. But if it does happen, if it does get signed, and more importantly, if we see ships start transiting through the Strait of Hormuz and I’m sure you’ll hear about it all over the media, then you might see gas and oil prices falling,” said DeHaan.
