We hear the reports often and we’ve come to expect gas price fluctuations as part of the norm. Most of us are familiar with the typical reasons too – crude oil prices, global economy, natural disasters, global demand.
But there’s one more you may not have heard about: warmer weather. Yes, if it’s time for sunscreen and shorts, it’s time to dig deeper in your wallet at the pumps.
Spring is the time for refineries scheduled “turnarounds” when full or partial shutdowns allow for regular maintenance, repairs or overhaul. They also perform testing and inspections, replacing equipment and materials as needed. Turnarounds are planned one or two years ahead and the process takes from one week to one month to complete. On average, they are conducted once every four years, which means roughly 25% of the nation’s refineries are shutdown in any given year.
- Summer Fun
On the heels of refinery activity is the season of travelers. School is out and many people have road trips and family vacations on their agendas. Along with busier roadways come the use of summer “toys” – barbeques, boats, jet skis and maybe even riding lawn mowers just to name a few.
- Seasonal Weather
Unfortunately, spring and summer are also the seasons of extreme weather like tornadoes and hurricanes. The natures of both can leave utter devastation in their trails, including damage to refineries, infrastructure and disrupted transport routes.
Each of these activities translates to periods of limited supply, increased demand and the potential for supply disruption – all of which have a direct impact of causing gas prices to go up. Two more causes of higher gas prices during warmer weather are less known, but perhaps the most significant.
- Environmental Regulations
Through the Clean Air Act of 1990, the Environmental Protection Agency (EPA) began the Reformulated Gasoline Program in an effort to decrease smog and pollution. During the ozone season of June 1 to September 15, higher temperatures cause more evaporation of contaminants, build up the ozone layer and block pollutants in stable air masses closer to the ground.
Leading up to that period, refineries are in the “transition season” of switching production of winter to summer grade fuels during March and April, and gas stations have until June 1 to make the change. Reconfiguring plants and requiring additional storage makes this a costly process for refiners, which in turn sees increased gas prices during this time.
Seasonal Gasoline Blends
Grades of fuel are measured by the Reid Vapor Pressure (RVP) system in pounds per square inch (PSI). The higher the RVP, the more easily it evaporates. All gasoline must be below 14.7 PSI – normal atmospheric pressure – or it would convert to a gas.
EPA regulations mandate that summer gasoline blends must fall in the range of 7.8 to 9.0 PSI based on area of the country. With varying levels of smog, formulations have been adjusted to meet local emissions standards, resulting in about 20 different grades of fuel being sold through the summer months.
With lower RVP standards and customized blends, summer fuels are more costly to produce than winter ones, which adds to the higher prices in warmer weather. With a higher RVP standard, winter-grade fuel contains greater levels of butane, which is abundant and inexpensive, making the product more affordable.
Market conditions and gas prices are always changing. Your fuel distributor can help you keep up with new and developing information, to ensure you are making best decisions for your business. The good news is, their professional services and expertise stay the same no matter what the season.