Gas Prices Are Headed Back Up In February (No Politics)

[Shazamalingo]

I always find it funny when people base a large, long term purchase on short term outlook of commodities. Why would you buy a less gas efficient car simply because gas is cheap that week?

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[mpeugeot]

Gasoline prices always start rising in February. The primary driver of this is refiners lowering inventory stocks of winter blend gasolines to make summer blend products. This trickles through pipelines, fuel terminals and finally your local retailer. Summer blend products are also more costly to refine than winter products

Citation please... Many regional blends of fuels are more costly independent of season and I suspect that in some regions that changes have very little impact, for example warmer southern states. I might add, that summer blend fuels likely add less than $0.30 per gallon under ANY circumstances.

As you can see not much of the country requires the more expensive RFG (Reformulated Gas with the lowest RVP values). The lower the value, the higher the cost.

 

[P52Ranch]

Citation please... Many regional blends of fuels are more costly independent of season and I suspect that in some regions that changes have very little impact, for example warmer southern states. I might add, that summer blend fuels likely add less than $0.30 per gallon under ANY circumstances.

As you can see not much of the country requires the more expensive RFG (Reformulated Gas with the lowest RVP values). The lower the value, the higher the cost.

Winter blend fuels across the country range from. 11.5 to 15.5 Reid Vapor Pressure PSIa (absolute). Summer blend fuels are capped at a maximum of 9.0 RVP. “Non attainment” areas are further restricted to various RVP’s as low as 7.0. There is a 1.0 PSIa allowance for ethanol blended fuels.

These lower pressure gasoline products have to be in all fuel terminals by May 1 and gasoline retailers by June 1. The most efficient way to get this accomplished is to start at the refineries in February by scheduling maintenance on reforming and alkylation units. That helps reduce refinery gasoline inventories. Which can cascade through pipelines and terminals.

Since the same tanks are used to store the products, inventories are sucked down to minimums a couple of times and then refilled. This ensures the tanks meet specs well before any deadlines.

All of this planned activity gets the market puckered up and bingo fuel prices rise.

 

[mpeugeot]

Winter blend fuels across the country range from. 11.5 to 15.5 Reid Vapor Pressure PSIa (absolute). Summer blend fuels are capped at a maximum of 9.0 RVP. “Non attainment” areas are further restricted to various RVP’s as low as 7.0. There is a 1.0 PSIa allowance for ethanol blended fuels.

These lower pressure gasoline products have to be in all fuel terminals by May 1 and gasoline retailers by June 1. The most efficient way to get this accomplished is to start at the refineries in February by scheduling maintenance on reforming and alkylation units. That helps reduce refinery gasoline inventories. Which can cascade through pipelines and terminals.

Since the same tanks are used to store the products, inventories are sucked down to minimums a couple of times and then refilled. This ensures the tanks meet specs well before any deadlines.

All of this planned activity gets the market puckered up and bingo fuel prices rise.

Demand actually plays more of a role than the blend... The blend is usually measured in a few cents per gallon with regard to the delta in price. The 10-15% increase in demand would impact the price as much, if not more. Plus, the difference in manufacturing 11.5 RVP vs 10.0 RVP gasoline (the true summer maximum) is negligible at best, because most retailers are pumping out 10% ethanol blends anyway. In San Antonio, Texas, non-ethanol gasoline (90 octane) is actually more expensive than premium (93 octane).

 

[AMTRV]

Yep, just where I expected this thread to go when I read the title.

 

[carmigo]

Gasoline prices always start rising in February. The primary driver of this is refiners lowering inventory stocks of winter blend gasolines to make summer blend products. This trickles through pipelines, fuel terminals and finally your local retailer. Summer blend products are also more costly to refine than winter products

Interesting insight! We'll have to look into that and learn more. Thanks for sharing!

 

[carmigo]

I always find it funny when people base a large, long term purchase on short term outlook of commodities. Why would you buy a less gas efficient car simply because gas is cheap that week?

You make a valid point. Buying a car is a big deal, so we would hope most people would base that decision on several other factors across a long period of time.

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