By Deborah Baska
Added June 1, 2009
Summer is here (well not officially, but close enough)! For kids, this means “school is out”; let the good times roll! For parents, it means, “school is out”; what am I going to do with the kids all day, every day? For consumers, this means, “Here come those high gas prices again!”
Now, I used to be a consumer of gasoline – about 17 years ago – so I totally get the puzzlement and passion consumers feel when “those darn gas people set out to ruin our summer vacation with those high gas prices”. Today, as one who consumes AND sells gasoline, I’m still sometimes puzzled about gas prices (scary thought, I know), but I am also passionate about doing what I can to arm my fellow gasoline consumers with knowledge. Because believe you me, as a gasoline consumer, my pocketbook hurts as much as anyone’s when gas prices are high and I, too, want to know WHY!
You most likely won’t get the real story from your local news channel – the real story probably isn’t dramatic enough to draw high ratings. So, below is the quick and dirty details to the question to which we all want to know the answer: Why do gas prices rise in the summer?
- Simple economics: Those long, lazy summer vacation days do equate to increased demand (about 3.5% on average).
- Seasonal transition to EPA mandated summer-blend fuels: These environmentally friendly fuels are more expensive and complex to produce by the refiners. Did you know that since 2000 (implementation of the Clean Air Act), fuel prices rise—on average—50 cents per gallon (cpg) between February 1 and the summer peak? To date in 2009, gas prices have risen 54 cpg.
- Increased costs: Crude prices are up. Wholesale prices are up even more (see #2). And street price (that is, the consumer price) is up LESS than wholesale prices. This is bad news for retailers. (see “Are You Going to Roll Over and Play Dead?” for breakeven on retail margins.). Rest assured, your friendly local c-store retailer is not raking it in at your expense.
My good friends at NACS also share my passion for spreading the word, so you can read more about what impacts gas prices at their website http://www.nacsonline.com/NACS/News/Daily/Pages/ND0528091.aspx.
So, now I’ve answered your question about gasoline pricing. That still leaves my question: What to do with the kids all summer?!
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