GasBuddy report shows Lansing continues pattern of ‘price cycling’

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LANSING — A new GasBuddy report shows Lansing gas prices are up 11.1 cents per gallon in the past week.

And that’s not a surprise, according to Patrick DeHaan, head of petroleum analysis for GasBuddy.

“The rise of gas prices in Lansing this past week is part of a phenomena that exhibits what we call price cycling,” DeHaan said.

Price Cycling

Price cycling behavior begins when a gas station starts to lose money and reacts by raising its price. That increase prompts nearby stations to also raise their prices. Once the prices match each other, prices decrease and the cycle repeats.

A 2019 GasBuddy line chart illustrates the consistency of Lansing’s ‘price cycling’ pattern by which gas prices rise suddenly then drop off for a couple weeks, then rise again.

DeHaan said price cycling is not Lansing-specific, but also occurs in the Great Lakes region and in Florida because retailers who sell to these regions undercut one another.

“It’s a price war,” DeHaan said.

Compared with other non-Great Lakes states and Florida, most other states tend to exhibit gas pricing behavior that is less erratic and more gradual. For example, in Los Angeles, gas prices increase and decrease occur slower.

2019 GasBuddy graph comparing and contrasting the price increases and decreases in Los Angeles, CA and Lansing, MI.

Economic Pressures

In addition to the price war, other factors like economic pressures including U.S. relations with Saudi Arabia, the U.S.-China trade war and the possibility of seeing economic lows contribute to Lansing’s fluctuating gas prices and declining gas prices in some states.

“With the economic uncertainty that’s going on right now, the threat of a recession is looming over us,” DeHaan said.

When the economy is weak, so is the demand for oil.

“Whether it’s taking a road trip, buying something from Amazon, when there’s less disposable income, there’s less demand for oil,” DeHaan said.

Provided the U.S. – China trade war continues, customers can expect to pay less for gas, but not without the occasional price hike.

To compare and contrast overall gas price trends, visit https://www.gasbuddy.com/charts

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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