Expert breaks down high gas prices and factors impacting price at pump

 SOUTH BEND, Ind. -- According to GasBuddy, the national average for a gallon of regular is just under four dollars.

Gas prices in South Bend have jumped an average of $1.31 a gallon over the past four weeks, according to Patrick De Haan, Head of Petroleum Analysis at GasBuddy.

He says the bulk of the price increases are directly tied to what’s happening in the Middle East. 

“Iran has essentially made threats against vessels that are sailing through this Strait of Hormuz, attacking some of them, and that has caused other vessels to basically just drop anchor, not sailing through the Strait. So, in essence, that has essentially cut off the world's supply of oil, at least 20 million barrels of oil to the global market every day, and that's obviously having a very big negative impact on not only oil prices, but supplies,” said De Haan. “Some areas of Asia have been essentially cut off from the flow of oil. China has started shutting down some of its refineries, and that's what has pushed oil prices up globally. The US, unable to insulate ourselves from what's happening overseas. This is something that's taking the world by storm, not just in the US and not just in Canada, but every country is seeing an explosion in the price that they pay at the pump."

De Haan also discussed some seasonal factors in the current cost of gas.

“I would say that 80-85% of this is really the situation in the Middle East, pushing oil prices up. The other 15-20%, really the seasonal factors, as you mentioned. We are switching to more expensive summer gasoline ahead of the warmer weather. Demand for gasoline is going up as we start to get away from the coldest winter weather, some of that because of spring break travel. In addition, refinery maintenance is also happening. The seasonal factors all work together to push prices up on an average year anywhere from 20 to 45, maybe 50 cents a gallon,” said De Haan.

ABC57’s Jordan Tolbert asked if anything stands out in Indiana and Michigan's price jumps compared to other states.

“Not so much. I mean $4.19 is a higher level than what we're seeing in areas like Ohio. Typically, Indiana prices go up to a level that's usually about 10 cents below that of what Michigan does. Michigan raised its gas tax on January 1, so that is a little bit more rare to see Indiana and Indianapolis and South Bend and Fort Wayne going up in equilibrium with Michigan, said De Haan.

De Haan says the Midwest has been seeing some of the country's larger increases since the war began.

“Now, some of that has to do with the fact that prices make a bigger jump up across our market, something called price cycling, which we've talked about before, but that also then will allow prices to start going down a few cents a gallon every day after they've made that big jump up,” said De Haan. “And with oil prices recently starting to decline because of the prospect of talks with Iran, there may be a little bit of optimism, some light at the end of the tunnel, that maybe prices over the next few days can start working their way back closer to falling below that $4 mark again,” said De Haan.

De Haan says gasoline is seeing the smallest price increases right now compared to jet fuel and diesel.

He says diesel is now averaging $5.40 a gallon, the highest tally since 2022. The skyrocketing diesel prices are directly impacting farmers, trains and truckers.

“Truckers also hit with a jump in the price of diesel exhaust fluid, another type of fuel that they need to reduce emissions, that component, urea, in DEF, has been stuck in the Strait of Hormuz. So, crippling, almost to a significant degree. Diesel prices well above $5, it's going to cost a lot more for your farmers to get that food out of the field into your grocery store,” said De Haan.

De Haan says as a result of all this, inflation could heat back up.