Winter Gas Formula Means Lower Prices for Consumers
Last week, California began its statewide switch to a winter gasoline formula, which means consumers should anticipate a decline in gas prices. Why is that, you may ask? In the summer, refiners eliminate some of the more volatile blending ingredients in the gasoline because summer heat makes them evaporate and that can stop the engine from running (vapor lock) and increase air pollution. In the winter, when temperatures drop, the volatility isn’t as much of a problem, so additional blending components such as butane can be used again to create more gasoline with higher vapor pressure. The higher vapor pressure helps ensure older vehicles will not experience “cold start” problems when temperatures dip below freezing. Click here to learn more about how gasoline is refined.
The addition of blending components in the winter increases the production of gas from a barrel of oil by 5 to 8 percent. That means there is a slightly higher supply of gasoline. At the same time, people tend to take fewer vacations and drive less in the winter, so the supply of gasoline increases and the demand for it declines, normally causing prices to drop. Demand for gasoline reaches its lowest point in January.
How much will prices drop in California this winter? That depends partly on how much the world’s crude oil continues to drop and how long refineries curtail production for regular maintenance. Refineries tend to conduct more maintenance in the winter time and bigger maintenance projects every four to five years. This year happens to be the five-year point for several refineries in California. Since production is anticipated to decline, there will be less gasoline supply. Also, the ExxonMobil refinery in Torrance is still unable to produce gasoline because of its damaged pollution equipment, creating a 10 percent statewide shortfall. The equipment should be fully repaired early next year. With a continuing decline in crude oil prices, consumers should still see lower prices at the pump, just not as much of a decline as last year.
California is not the only state that switches to a winter gasoline formula. All states change to a different formula that depends on the regulations in each state.
Petroleum prices have fluctuated for years. The California 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.
