The Woodward News

March 1, 2013

Many factors driving higher gasoline prices

Chris Cooper
Woodward News

Woodward, Okla. — With gas prices at record highs for this time of year, many motorists might be curious as to just why that is.

Chuck Mai, director of public affairs for AAA Oklahoma said there's more than one reason.

"Firstly, summer blend fuel is more expensive to make," Mai said, noting that even though it's still winter, refineries are already beginning to make the switch to the summer blend.

He explained that summer blend fuel has additives intended to reduce the impact of increased pollution during the more active driving season.

"Secondly, refineries have to shut down and clean out the system before they can start producing the summer grades, and consequently the refineries are offline between 1 to 3 weeks for the process which limits fuel supply during that time frame," he said.

In addition to routine refinery shutdowns for the changeover in gas blends, Mai said there have also been unexpected shutdowns prompted by maintenance issues at some refineries.

"There have been other maintenance concerns that many refineries have been facing in January and February," he said. "These unplanned refinery shutdowns have resulted in a lower crude oil processing."

Mai believes a run up in the price of crude oil due to the anticipated demand from countries like India and China are also responsible for prices at the pump.

"In China and India there have been reports of strong economies which has caused investors to expect the demand of crude oil by those countries to go up. As a result investors bid that up as they would any other commodity wether it's gold or pork bellies," he said.

This increased international demand for oil may be offsetting any American fuel conservation efforts, such as driving more fuel efficient vehicles, running multiple errands in one trip, or avoiding driving altogether, Mai said.

"Really Americans are learning to conserve fuel, demand is low and supplies are good, but international pressures have caused prices at the pump to go up," he said.

Mai added that January and February are typically a time of moderate prices due to low fuel consumption.

"It's troubling to see prices rise at the same time we're seeing refinery problems," he said.

Usually March and April are when consumers see fuel prices go up, Mai said.  And while this year's increase in fuel prices may have started early, he still expects prices to continue to rise into the spring.

"We might see peak price in early to mid-April," he said.

Mai said that while the summer driving season was once responsible for the increase in fuel costs, it might not be the determining factor anymore.

"The increased demand of summer driving season actually doesn't play that big of a role anymore. International geopolitical concerns, refinery issues, crude oil prices, and the strength of the economy are the main influences," said Mai.