Despite the Sept. 29 economic downturn, a Ball State University professor said gas prices shouldn't be immediately affected.
The general public has common misconceptions about how gas prices change, economics professor Cecil Bohanon said.
One factor is mainstream media coverage of gasoline prices, he said, which leads to the idea that prices can increase drastically in a day but are not likely to fall in the same way.
Bohanon said psychological factors make it seem like gas prices never go down after increasing by ten cents or more.
"People pay more attention to price hikes than price declines," he said, "and that's just human nature."
Bohanon said gas prices were determined by the interaction of several levels of production.
He said it seemed to most people for every dollar oil prices increase, gas prices go up 3 or 4 cents. It isn't that simple, he said. Between the refinery and the gas station, dozens of variables can affect prices.
Increases in demand or disruptions in supply can contribute to price differences between regions.
If a pipeline breaks or a refinery shuts down unexpectedly, a region experiences a shortage in supply.
Demand can increase in many ways as well, he said. Gas stations' natural response to a shortage would be to increase prices, he said.
Distribution companies can also increase prices, Bohanon said. During shortages, distributors from other regions will sell to gas stations for slightly lower prices than the normal distributor, but higher than they can sell it in their own region. Prices will remain high until the normal supply returns.
Gas stations buying from outside distributors can also cause shortages when they do this, he said. If gas is diverted from a region to take advantage of higher selling prices, eventually that region can experience its own shortage. Bohanon said at any given time, this process will happen somewhere and it eventually balances.
He said, when their costs increase, gas stations increase their prices but make little, if any, profit and often lose money on gas. Gas stations allow themselves to lose money on gas because they are desperately trying to keep their customers, he said. If they increased the price high enough to make a profit, they would lose business to competitors that kept prices lower.
Most stations make more money on convenience store items, and lower gas prices will bring people into the store to buy them. To make up for profit losses, they don't decrease the gas price as fast as the oil price, he said.
The natural response for gas station price setters would be to gouge prices - which is raising prices dramatically during shortages. A state's attorney general monitors prices during shortages and sets a ceiling to avoid price gouging.
Without price gouging, national gas prices are still higher than they were a year ago, according to the Energy Information Administration's Web site. September's average prices were about 84 cents higher than last September's.
Despite these increases, some students said they aren't feeling the effects of the increase.
For art education freshman Chase Craig, gas prices aren't a major problem, but they are annoying, he said.
"It's just an extra expense," he said. "Being an art student I have a lot of expensive supplies."
Craig commutes to campus every day from Losantville, about 20 minutes east of Muncie, he said, and it costs between $30 and $40 each week.
Sophomore operations management major Kyle Thompson said he managed to keep his gas expenses to $10 or $15 each week, though he does not commute. He said if gas prices continued to increase it wouldn't restrict him any more than it did now, but he probably would walk more and drive home less.
Like Thompson, Craig said he's trying to cut down the time he spends in the car.
"I try to avoid driving when I can," Craig said, "mostly because it's so expensive."
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