With the summer driving season arriving and the subsequent increase in gasoline demand, refiners are planning their annual maintenance turnarounds to restrict supply. Additionally, they’re claiming that a spike in corn prices are driving up the cost of ethanol, which is an additive used as in volumes up to 10% in retail gasoline.
The problem is that ethanol is a completely unnecessary additive and significantly lowers MPG. It’s use is solely due to big agricultural lobbies buying legislation for their own benefit, at our expense.
A consortium of oil-producing countries has taken more than a million barrels a day off the market — and that’s the least of the problems plaguing American gasoline prices.
Across the U.S., regular gas averaged $2.77 a gallon, up 7 cents on the week and 29 cents on the month, according to GasBuddy. Last year, gas prices topped out at $2.98 at the outset of Memorial Day weekend.
Skyrocketing prices are particularly pronounced on the West Coast. According to GasBuddy, California already has the highest gas prices in the country at an average of $3.77 per gallon for regular gas, an increase of 49 cents over last month’s average. GasBuddy head of petroleum analysis Patrick DeHaan warned in a Sunday tweet that prices weren’t done going up just yet, predicting that the average price in California will top $4 this week.
“It’s nothing short of spectacular on the West Coast. A trifecta of issues is causing gas prices to surge,” DeHaan said.
Oil prices are climbing, but that only accounts for about one-quarter of the recently higher gas prices American drivers have been facing, he said. A bigger issue is that this is around the time of year when many oil refineries plan maintenance as they make their annual switch to summer-blend fuels.
This year, unexpected issues took a higher number of refineries offline, squeezing supplies. “This laundry list of refinery issues, both planned and unplanned, is having a dramatic impact on prices,” DeHaan said. “It’s almost inevitable every year that there will be a refinery issue.”
Another factor driving up gas prices is ethanol, a corn-based fuel refiners are required to mix into summertime gasoline blends. Flooding in key Midwestern ethanol production hubs like Chicago has disrupted the delivery of ethanol and made supplies scarce.
The upshot is that drivers in different parts of the country will continue to see prices climbing in the coming weeks, albeit at different rates.
“At OPIS, we still think gasoline prices on balance for the driving season are going to be slightly lower than they were last year. The major exception to that is the West Coast,” said Tom Kloza, global head of energy analysis at Oil Price Information Service. “We’ve added 2.4 million barrels a day of refining capacity, but it’s all been added in the Midwest and Gulf Coast,” he said.