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What's With the Huge Swing in Gas Prices as We Approach Memorial Day?

What's With the Huge Swing in Gas Prices as We Approach Memorial Day?

  As we approach the Memorial Day weekend, gas prices across the country are showing perhaps the widest range ever, from below $3.20 in Arizona and parts of Texas, to more than $4.30 in the upper Midwest, 1200 WOAI news reports.

 

  Bill Day of San Antonio based Valero Energy says the wide price fluctuations are an indication that gasoline prices have become more regional than national, with prices more likely to reflect the market conditions in that particular area than the general price of crude oil.

 

  "The gasoline itself has a certain cost, and then when you transport it long distances, the cost of transportation have to be added in there as well," Day said.

 

  He says a lot of the price where you live has to do with how many refineries are in your area.  He points out that gas prices are 40 percent higher in Wichita, in refinery-poor Kansas, than they are in Stillwater, in refinery rich Oklahoma.

 

  "There is only one refinery in the entire state of Kansas," he said.  "That is a different situation, when you are very dependent on that refinery for your supply."

 

  He points out that many states have raised gasoline taxes in recent years.  Most states' road building and maintenance funds are replenished by gasoline taxes, and with vehicles getting far better gas mileage, those funds have been depleted.

 

  "You have to factor in the cost of gasoline taxes, which vary widely from state to state," he said.  "In a state like California, the gasoline taxes are almost twice as much as they are in Texas."

 

  When it comes to gasoline, the tax is included in the pump price, unlike retail products, where taxes are added on at the register.

 

  But what about the Upper Midwest?  Minneapolis has the highest gasoline prices in the country today, unlike usual leaders like Northern California and New England.

 

  Day says you can blame the cold weather this spring.  He says the U.S. Environmental Protection Agency requires special blends of gasoline during the warm weather months, and switching to the 'summer blends' requires refineries to shut down to make the switch.  Usually those switches are made in March, and the spike from the refinery closings have vanished by Memorial Day.

 

  But he says this year, the late spring has pushed Upper Midwestern refineries to make the switch later, leading to the Memorial Day price spike.

 

  "That summer blend is now being adopted in the Northern states which have been cooler," he said.  "That means they're stating to see higher prices in the Northeast, the Upper Midwest, and the Pacific Northwest."

 

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