Why prices are jumping at the gas pump
The summer driving season is fast approaching, and with it the annual hike in gasoline prices. But many parts of the U.S. are already contending with unexpectedly high prices at the pump this month, weeks ahead of schedule.
According to blogger Patrick DeHann at GasBuddy.com, the national average for gasoline rose another 2.3 cents last week to $3.63 per gallon -- or around 12.1 cents per gallon higher than the same time last year.
Gas prices in the Northeast saw the highest weekly jump, with costs at the pump in both New Jersey and Delware rising by nine cents a gallon.
A number of factors are behind this jump at the pump. According to AAA, lower gas inventories plus a release of pent-up demand after an unusually brutal winter have combined to boost prices in 46 of 50 states.
International issues also play a role. The current Ukraine-Russia crisis could threaten shipments of Russian oil to Western Europe, affecting global prices. And ongoing tensions in the Middle East could also boil over and further push up crude and gasoline.
We're also approaching the May 1 deadline for U.S. refineries to switch over from winter blends to summer blends of gasoline. AAA notes conventional summer-blend gas contains 1.7 percent more energy than the winter versions, which might also account for why your gas mileage seems better in the summer. But it also notes that those summer blends are "more expensive to produce, and that cost is passed on to the motorist."
This switchover can also lead to disruptions in refinery production, something that apparently happened during recent "glitches" at a BP (BP) facility in Whiting, Ind., and an ExxonMobil (XOM) refinery in Joliet, Ill.
"I think once we get through April, prices will look better," AAA spokesman Gene LaDoucer told the Des Moines Register, referring to Midwestern gas prices. "But once you get a lot of refineries undergoing maintenance, anything could happen."
Still, some indications hint that gas prices might actually head a bit lower by Memorial Day, the unofficial start of the summer season.
At GasBuddy.com, DeHann expects prices to peak during the next several weeks and then start declining, he says, to the point where California's average gas price could end up back under $4 a gallon by mid-summer.