When could Indiana see gas prices in the $3 range again? It could be years, expert says

Claire Rafford, Indianapolis Star
·3 min read

As summer travel picks up and people hit the road, they will be alarmed — but likely not surprised — at the gas prices listed at roadside stations.

Summer is historically a season where many people hit the road, thus increasing demand at the pump. But this year, the supply of gas won't be poised to match travelers' road trip desires.

As of Tuesday, the national average price for a gallon of regular gas is $5.02, while the average in Indiana is $5.21, according to AAA. The national average hit $5 for the first time ever on Saturday, USA TODAY reported, citing AAA data.

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Consumers are likely anxious to know when fuel prices could decrease, but that financial relief could be a long time coming.

"We are not going to quickly bounce back to affordable prices anytime soon, I'm afraid," Patrick De Haan, head of petroleum analysis at GasBuddy, said.

But how did we get here? Increases in gas prices may have started to make headlines recently, but the problem's roots trace back to the COVID-19 pandemic, De Haan said. When the pandemic hit, oil companies slowed down production and even closed some refineries in the U.S.

Some have converted to producing renewable products, thus decreasing capacity, De Haan said. Oil refining capacity has fallen by a million barrels a day compared to 2019 levels, giving refiners less ability to meet rising demand for fuel.

Due to these supply issues, the Midwest is currently seeing its lowest gasoline supply on record, De Haan said, contributing to high prices as "gasoline inventories have never been this low going into the summer."

Additionally, Russia's invasion of Ukraine hiked up oil prices, which has "really widened the imbalance between supply and demand," according to De Haan.

Demand has not decreased in response to higher prices caused by diminished supply. Because many Americans are still willing to fill up their tanks even at $5 a gallon, De Haan said, and with no sign of Russia leaving Ukraine, "this isn't going to change or improve anytime soon."

When could $3 gas return?

So when could lower prices, in the $3 to $3.50 per gallon range, for example, return? A major world event, like an economic recession, could drive down demand. De Haan said he could not give a concrete time estimation as to when prices might decrease, as "everything is so uncertain," but said it could be a while.

"if everything remains consistent with where things are today, it may take a couple of years for us to get back to those more affordable prices," De Haan said.

"It takes time for the higher prices to lead to additional oil production," he added.

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Gas prices will likely remain between $4.50 and $5.50 through the summer, De Haan posited, though there are many factors that could affect these estimations.

One such factor is hurricane season. De Haan said that a hurricane in the South could affect gasoline supply for the entire country, as many of the nation's largest refineries are located in the region between the Mississippi River and Houston.

The National Oceanic and Atmospheric Administration is predicting an above-normal hurricane season for 2022.

"I'm more worried that any any kink in the supply chain at this point could widen the imbalance," De Haan said. "If we get a hurricane, it's not impossible that average gas prices in Indy could reach the $6 mark."

Average gas prices in Indiana

As of Wednesday, here are the average prices per gallon for regular gas in cities across Indiana, according to AAA.

  • Indianapolis: $5.20

  • Bloomington: $5.25

  • Columbus: $5.22

  • Clarksville: $5.16

  • Elkhart: $5.20

  • Evansville: $4.98

  • Franklin, Dearborn, Ohio, Union: $5.13

  • Fort Wayne: $5.22

  • Gary: $5.37

  • Kokomo: $5.24

  • Lafayette: $5.12

  • Muncie: $5.19

  • Michigan City-La Porte: $5.23

  • South Bend: $5.19

  • Terre Haute: $5.20

Contact IndyStar trending reporter Claire Rafford at crafford@gannett.com or on Twitter @clairerafford.

This article originally appeared on Indianapolis Star: Indiana gas prices: When could Indiana see $3 gas? Not for a while