Gas prices moving back down a bit

Gas prices are starting to come back down after an unexpected spike last week. Prices in central Indiana are down about a dime from the high of 2.99 a gallon that most stations rose to last week, an increase that many analysts didn‘t see coming. “We had expected gas prices to peak and begin declining, but there was a surprising decline in crude oil and gasoline inventories as reported by (the Energy Information Agency),” said Patrick DeHaan, senior petroleum analyst with GasBuddy.com. The price increase last week was actually two-fold, DeHaan says, with the first increase coming due to a series of refinery problems, including three in Illinois and one in Memphis. “Then, in the Great Lakes, a big buyer came into the market looking to buy a large quantity of gasoline, and with all the regional refinery problems, that propelled prices even higher,” DeHaan said. He did not know the identity of the major gas buyer. Even with the drop in the amount of oil and gasoline on hand, DeHaan thinks markets overreacted with their price increases. “You really need to put everything in perspective. Though inventories declined, they are 22-percent higher than this time last year – that‘s some 80 million barrels,” DeHaan said. “We are still awash in crude oil, even though we are having refinery issues.” One reason prices have started to drop, DeHaan believes, are refineries coming back online and some traders selling shares after last week‘s price spike.