Summer Gas Formula Means Higher Prices for Consumers
Southern California has switched to a summer gasoline formula. Northern California will start its switch in March. Usually that means consumers can anticipate a small increase in gas prices.
California motorists have been enjoying declining gasoline prices over the last five weeks with the average price of regular grade gasoline down by 57.5 cents per gallon between January 7 and February 25. But, the advent of warmer weather has ushered in an annual rite of spring: the switch from a winter to a summer gasoline recipe.
In the summer, refiners eliminate some ingredients in the gasoline, like butane, to keep polluting emissions low and prevent vapor lock that can stall engines and prevent restarting. Click here to learn more about how gasoline is refined.
The reduction of blending components in the summer reduces the supply of California’s blend of gas by 5 to 8 percent and increases production costs. So it is no surprise that gasoline prices have recently rebounded from an average low of $2.30 cents per gallon on February 25 to $2.39 cents per gallon on February 29, an increase of almost 9 cents per gallon. Driving increases this time of year as do prices. Refiners usually operate at higher levels and draw down their inventories to help meet this seasonal increase in demand.
But, there’s good news, according to Gordon Schremp, senior fuel specialist at the California Energy Commission. This year there may be fewer refinery problems. California recently completed an extraordinary amount of maintenance and repairs, which caused supplies and inventory to drop and prices to rise. ExxonMobil is planning to repair pollution equipment to restart its gas production at Torrance refinery. Once that is done, possibly in April, about 10 percent of the state’s gasoline supply should be restored.
What’s that mean for prices? Californians may see prices drift down again and level off.
California is not the only state that switches to a summer gasoline formula. All states change to a different formula that depends on the regulations in each state. But, California is the first state in the nation to make the switch and the last state to transition back to the winter formula in early November.
Petroleum prices have fluctuated for years. The Energy Commission is helping to fund advanced technology that will enable Californians to switch to alternative, less polluting fuels and energy that may offer more stable prices.
