Posts tagged “winter gasoline”
Fall Means Falling Gasoline Prices
Fall is always a welcome change of pace for most people after a long, hot summer. Not only from the temperatures, but fall almost always brings relief at the gasoline pump. Pundits frequently notice this phenomenon during election years, and assume that vested interests are trying to manipulate prices to win elections. But there is a more straightforward explanation to what’s going on, and it isn’t limited to election years.
Everyone knows that gasoline evaporates. What you may not know is that there are numerous recipes for gasoline, and depending on the ingredients, the gasoline can evaporate at very different rates. And because gasoline vapors contribute to smog, the Environmental Protection Agency (EPA) seasonally regulates gasoline blends to minimize emissions of gasoline vapors. CONTINUE»
High Gas Prices During Election Season
Last week, reports from both Platts Energy News and Reuters said that officials in the Obama Administration are considering releasing oil from the U.S. Strategic Petroleum Reserve. The Platts report even said that a release was “imminent,” citing a meeting on Thursday at the White House with oil analysts. Other reports stated that the release could be up to 180 million barrels – six times as large as last summer’s.
Such a release would be contrary to the rationale of having Strategic Petroleum Reserves, and — coming only 60 days before an election — it would be a nakedly political ploy seemingly aimed only at alleviating a persistent political vulnerability: high gas prices.
While U.S. gasoline prices have been on the rise for the past two months — and are presently $0.15/gallon higher than they were a year ago — I expect that gasoline prices will start to fall rapidly in the weeks ahead. There are four reasons for this.
- First is that the spike from Hurricane Isaac will be short-lived as damage to oil and gas infrastructure seems to be limited. Facilities will be back online relatively quickly.
- Second is that summer driving season is at an end, and demand for gasoline will now decline.
- Third, the transition to winter gasoline (explained in depth in Refining 101: Winter Gasoline and Why Summer Gasoline Means Higher Prices) begins on September 15th. This will both lower the cost and increase the supplies of gasoline.
- Finally, the recent run-up in oil prices appears to be already priced into the cost of gasoline.
Originally posted a year ago today (9/14/06), this one is due for a bump since RVP transition is once again upon us. This is going to make product inventory forecasts a bit tricky over the next month or two as high RVP gasoline is purged from the system. —————————- Now, for something that I think will be non-controversial, and hopefully somewhat educational. Every year in late summer, you will start hearing references in the media about the conversion to winter gasoline, such as the following (originally in the Bradenton Herald, but the link is long dead): Motorists can thank a mild hurricane season in the Atlantic for the lower gas prices, according to the American Automobile Association. Other factors include… Continue»