Analyst Explains Gas Price Spike

The lower price of unleaded gasoline has relieved a pinch from consumer pocketbooks, but some retailers have dropped the price too low for a profit margin. Senior Petroleum Analyst Patrick DeHaan said that has caused prices to spike.

“What you’re seeing with the big spike is essentially gas stations losing 20 or 25 cents a gallon and raising their price back up to where they’re making about 15 or 20 cents a gallon. Obviously, you have a 40 cent a gallon difference between a station losing 20 cents and making 20 cents and that’s where these big spikes come from. The good news is that prices are already coming back down,” said DeHaan.

Prices will not go much lower than where they are now.

“I think we’re very close to where we are going to bottom out this time around. Prices will likely go back under two dollars and will continue to bounce around maybe in the high one dollar range to the low two dollar a gallon range.”