UNDATED (WTAQ) – You might notice that you’re paying a bit more for gas these days.
As of Tuesday, drivers in the Green Bay area were paying $1.568 per gallon for regular unleaded while Appleton area motorists are paying slightly more at $1.633 per gallon. The prices in Green Bay were up 2 cents overnight, while Appleton prices rose nearly 4 cents.
One petroleum analyst mostly blames what happened last week on the wholesale market, saying battered prices for fuel have gotten off the mat.
“Last week was probably one of the most volatile weeks I’ve seen in gasoline markets in quite some time,” says GasBuddy.com Senior Petroleum Analyst Patrick DeHaan. “You started the week with a 25 percent or so decline, and finished the week with a massive 72 percent gain. Stations are now passing along that increase in market price.”
DeHaan has a saying that once the, “Sweetness of Valentine’s Day is over, comes the bitterness of higher gas prices.” The good news, DeHaan adds, is that the increase at the pump is not going to mirror the wild behavior seen in the wholesale markets.
A BUMPY ROAD AHEAD
DeHaan says the days of dancing in the streets because of rock bottom gasoline prices are over, so drivers need to be prepared.
“How high will prices go? Much of that is contingent upon the actual situations that may develop during this refinery maintenance. Any road bumps are going to be significant,” says DeHaan. “Over the next 3 months, prices will either get very close to or go back over $2 a gallon.”
The pain at the pump, DeHaan says, is very relative since last year on February 16 drivers in Northeast Wisconsin were paying $2.25 per gallon.
“We’re starting at a much lower floor and the ceiling will be much lower as well,” DeHaan says. “Prices at the pump likely peaking at some point in mid-to-late May or early June.”
THE STORY OF “SUMMER BLEND”
According to the EPA, June 1 is the first hard date that gas stations must be selling the so-called “summer blend” of fuel.
“Behind the scenes, due to the nature of pipelines and storage facilities that hold millions of barrels of gasoline the transition actually begins in February,” says DeHaan. “With refineries making, essentially, a 4-step transition to purge out that winter gasoline and then that would be complete by June 1.”
DeHaan explains that the summer-spec blend does cost more to produce, but from a supply aspect it’s going from one type of gasoline produced for Wisconsin gas stations to multiple formulas.
“Several counties in Southeast Wisconsin use a different type of summer gasoline than the rest of the state,” DeHaan says. “So the cost in the region in the summer, like Kenosha and Milwaukee, are always going to be higher than the rest of Wisconsin.”
Add in the timing of this switching of gasoline blends, and that leads to other problems when it comes to getting fuel to the stations and what they will charge you to fill up.
“It’s the time of year when refineries do seasonal maintenance because of weak demand, now that lasts 4 to 6 weeks so it starts when demand is weak but it finishes when demand is really beginning to ramp up,” explains DeHaan. “Combined with the increase in demand going to these unique blends that are more costly and that are much more localized, it can create hotspots. Some variance of some gasoline, if a refinery goes down or if maintenance goes long, there may not be enough supply.”
DeHaan says there are many more complexities to producing a summer-spec gasoline than there is in the winter, which causes these annual rises in pump prices.
