5-15-2017
Secret at the pump: Why Indiana gas prices jump suddenly for no apparent reason
http://www.wthr.com/article/secret-...s-prices-jump-suddenly-for-no-apparent-reason
For years, Indiana gas prices have been on a rollercoaster ride for no apparent reason. The price you see at your corner gas station in the morning frequently jumps 30 - 40 cents by the time you head home in the afternoon.
It just happened again. The price at central Indiana gas pumps shot up last Tuesday – by as much as 54 cents per gallon at some gas stations – even though the price of crude oil went down that same day.
The sudden, unexpected price jumps drive Hoosier motorists crazy.
"Beyond crazy," said Susan Ellington of Noblesville, who filled her gas tank just a few hours after the price of gas jumped from $1.81 to $2.35 at a Camby gas station. "I don't understand it," she said.
The truth is frustrating -- but also fascinating -- and once you understand what's really happening, you'll likely never see gas prices the same way again.
"Most people just don't get it. They see it as a big mystery," said Scot Imus who runs the
Indiana Petroleum Marketers & Convenience Store Association. "It's really a buying opportunity for consumers, but they're not really aware of it."
"Yeah, it really is an opportunity to save hundreds of dollars a year," agreed Patrick DeHaan, a petroleum analyst at
gasoline industry watchdog GasBuddy. "This is very predictable, and if you understand it, you can beat gas stations at their own game."
A terrible "game" for the industry
That "game" happens every day in Indiana as gas stations compete for your business. Gas retailers constantly engage one another in neighborhood price wars, dropping their gas prices a few pennies at a time (sometimes several times a day) to lure you to their gas pumps.
"Stations in Indianapolis are constantly undercutting each other – essentially a price war every day," explained DeHaan. "It takes a week or so for those stations to drop their price so low that they're losing money. And then somebody will wave the white flag and they'll both raise their price again." That's when we get socked with sticker shock at the gas pump as gas stations reset their prices to a more profitable level.
The strategy is called "price cycling," and it happens in central Indiana, on average, every 10-12 days. Midwestern states like Indiana are the only places in the country where this occurs.
In most other states, prices rise and fall more slowly and steadily based on the wholesale price of gasoline and oil. According to the National Association of Convenience Stores, those gas stations set their prices to reflect an average markup of about 20 cents on each gallon of gasoline.
But in Indiana, price cycling means frequent, dramatic price swings that often have nothing to do with the traditional pricing factors that impact the price of gasoline. Rather than a steady 20-cent markup, Indiana gas stations may go days with only a 4- or 5-cent markup as they try to undercut or match competitors, then spike their prices to collect a 35-cent markup that helps recoup profits lost during their ongoing price war.
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Read the rest of the article at the local TV station.
Now I know the real reason is it's a game to them.
I don't appreciate them playing with my money.
Bastards should be jailed like Madoff, it's not any different than what he did.
They are getting away with a cycling pyramid scheme.