Summer Gasoline and Higher Gas Prices

by Don Elliott on April 17, 2012

Gasoline PricesDo you notice that your fuel efficiency (miles per gallon) changes from time to time? Do you wonder, as I do, how gasoline prices can fluctuate $.50 to $1.00 per gallon in a matter of weeks? Gasoline is gasoline, right?

Not quite.

Since 1990 and the Clean Air Act, the Environmental Protection Agency (EPA) requires the use of reformulated gasoline in major metropolitan areas from June to September. Summer gasoline costs more to produce. However, production costs are not the only reason prices shoot up when the summer vacation season arrives.

Simple supply and demand is one reason for the price increase. It is true that driving increases as the weather improves. A more important factor, though, is the gasoline refiner’s transition from winter gas to summer gas during the months of March and April. According to the EPA regulation, reformulated fuels have to be in gasoline stations by June 1. Altering production, upstream storage, and transportation logistics during the transition season slow down production creating a temporary shortage. The same situation occurs in reverse at the end of the summer with winter gasoline due at the pumps by September 15. The seasonal fuel program supposedly provides cleaner air during the summer months. The policy requires that refiners reduce the amount of “volatile organic compounds” from vehicle emissions.

Gasoline is not just gasoline. Gasoline is actually a blend of several products and additives. Winter fuels have more butane, pentane, and propane, all lighter compounds that evaporate faster in warmer weather. Summer gasoline additives like methyl tertiary butyl ether (MTBE) are heavier and more expensive. Other summer additives like ethanol are less efficient than gasoline, yielding less energy per gallon. Detractors of the program argue that the summer formulations are not specified so refiners choose the most inexpensive way to meet the seasonal fuel program requirements, even though it may not necessarily keep ozone and smog levels any lower.

To complicate things even more, not all summer fuel can be produced the same. Refiners are required to produce as many as 20 separate formulations to satisfy local regulations and climatic differences. Any disruption in production causes supply shortages and the resulting spike in prices.

No matter how hard you shopped for used car values when you purchased your car, it is clear that reformulated gasoline changes the fuel efficiency that you should be getting. What is not clear is whether summer gasoline is worth the price, environmentally and in your wallet.

Google+ Comments

Previous post:

Next post: