ANGOLA, Ind. (WLKI) - Indiana drivers could see a sharp increase at the pump as the state's gas tax holiday comes to an end, with one Trine University economist predicting gasoline prices could rise by about 60 cents per gallon.
The Herald Republican reports the gas tax holiday expires at midnight Wednesday, with the increase expected to begin showing up at fuel stations Thursday morning.
Marek Kolar, Ph.D., an associate professor in Trine University's Ketner School of Business, said rising global crude oil prices could push gasoline prices even higher in the months ahead. "I expect a spike in the gasoline price of about 60 cents," Kolar said, pointing to increases in the world price of crude oil connected to conflict in the Persian Gulf.
Kolar said he expects oil prices to continue rising over the longer term while also fluctuating significantly from day to day. He said gasoline prices could remain elevated for 12 to 24 months and potentially stay above levels seen before recent international conflicts.
State and local governments have limited options to offset higher fuel costs, Kolar said. Possible state responses could include a longer-term gas tax suspension or efforts to prevent local price gouging.
At the national level, Kolar said one possible approach would be restricting exports of West Texas Intermediate sweet crude oil, though he cautioned that such a move could create trade consequences if other countries retaliate.
Sweet crude contains less sulfur and is easier to refine into gasoline, but many U.S. refineries were designed decades ago to process higher-sulfur sour crude imported from other countries. Kolar said limiting oil exports would not eliminate the need for imported oil and could create additional challenges for the energy market.
As prices rise, Kolar said there could be renewed discussion about federal action on oil exports, especially if gasoline prices reach significantly higher levels.
In the meantime, consumers can reduce costs by comparing prices, using fuel discount programs and taking advantage of loyalty rewards when available.