The short answer?

It’s summer, people are driving more, and gasoline demand is at its peak.

But there are many factors that can contribute to gas prices rising and falling, according to experts. Those factors range from terrorism, to weather, to the stock market.

According to Butler University economics professor Bill Reiber, gas prices have been peaking since around September 2005, when Hurricane Katrina hit the Gulf Coast.

Reiber says that off-shore refineries were either destroyed or damaged to a point that they couldn’t meet the country’s gas needs. More recently, the start of the American “driving season,” associated with Memorial Day and Independence Day, caused gasoline demand to go up.

Other factors include the war in Iraq, uncertainties in the oil industry about possible terrorism, and natural disasters that could impact refineries.



How high will prices go?

Reiber said that there’s no reliable way of predicting how high prices will go. Again, he said, uncontrollable factors such as weather and “terrorism” affect gas prices.

Greg Seiter, a spokesman for the American Automobile Association’s Hoosier Motor Club, says that an exact prediction of gas-price highs is impossible.

“I think it’s important to know that there’s no one on the face of the planet that can predict gas prices,” said Seiter. “This year’s market has been like any other. Typically, after spring we will see prices level off.”

Seiter echoed Reiber, saying that unpredictable scenarios, like terrorism, could cause gas prices to skyrocket.



What causes price differences in Indiana, compared to the u.s.?

Indiana, as well as the whole Midwest, currently has some of the highest gas prices in the country — and Seiter said that is uncharacteristic for the region.

Usually, the Midwest is in the middle or lower end of the gas price spectrum. The region’s gas prices have begun to fall in recent weeks, in-step with the country, because of an influx of overseas oil. Seiter said a mix of regional demand and state taxes has made prices higher than usual.



Why do gas prices vary so much around the world?

But the Midwest is no match for the rest of the world. Reiber said that Europe and Asia have some of the highest gas prices in the world. The reason, said Reiber, is because space is at a premium in European and Asian countries, and their gas taxes are miles higher than ours.

“We have a bigger country, we like our bigger cars,” said Reiber. “We like our cars for traveling, that’s part of the American tradition. In Europe, in Japan, they don’t have much space, and they have to economize that space.”



how can high-octane fuel cost less than regular?

At the opposite end of the spectrum there’s Casey’s, an Alexandria gas station that sells super-premium gas more cheaply than regular.

The reason, according to Casey’s official Dustin Ray, is that the company gets premium gas at lower prices, and instead of selling it for more, it just keeps the price low. The goal, said Ray, is to pass on savings and to get people to check out Casey’s food selection.



is gasoline more expensive now than in decades past?

Even though $3.08 isn’t what we want to pay for a gallon of gas, believe it or not, in 2007 we’re getting a better deal than we did in the 1990s, 1980s and 1970s.

According to Reiber, adjusted for inflation, today’s gas prices are lower than they were in previous decades.

“Gas prices are less,” said Reiber. “Compared to education prices, gas prices are much lower than they have been.”



Compiled by

NEAL McNAMARA

neal.mcnamara@heraldbulletin.com