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Reason for increase in price of gasoline in summer season

02 August 2014 By In Blogs

 price of gasoline

In the last few months, the price of crude oil in international market has risen for about $6-$7per barrel to almost $125 a barrel because of uncertainties in countries producing oil like Iran. This has caused the speculation that the prices of gasoline will increase from the current $3.53 to $5 in this summer season. Unfortunately for most of the drivers, there is always increase of gas prices during the summer seasons especially at the beginning of Memorial Day.

 

There are numerous reasons as to why this happens with some being logical. There is increase in demand because most of the families travel on vocation and family trips. Furthermore, during the spring seasons, some energy companies closed down their companies for maintenance therefore making companies close down until May. As a result of these disruptions, there is a stretch in the supply of oil(James,2009). Natural disasters like hurricane play another major role in the increase in prices as it disrupts the routes of transportation and causing damage to infrastructure and refineries.

From the early analysis, the gasoline sold during summer season is totally different and more expensive as compared to that that sold during the winter time. The focus of this report will be on the shift from the fuel produced during winter season to that produced during the summer season. For the past twenty years, there has been a change in supply of fuel in USA (James,2009). This constant change is often referred as seasonal transition of gasoline which results to hiking of gasoline prices during the summer season. Most of the gas stations switch between providing winter-grade fuel and summer grade-fuel depending on the time of the year. This kind of switch started back in early 1990s as a result of establishment of 1990 clean Air act. There was an establishment of Gasoline Program that reduced the smog and pollution during the summer seasons which occurs between June and September.

The disparity that exist between summer-grade and winter-grade fuel is that summer-grade fuel is expensive because of the ingredients it contains and it also because most of the refineries have closed down for maintenance.   Several analysts have estimated that there will be an increase of 1-3 cents per gallon in some states while some will have the increase of 3-14 cents increase per gallon (Daniel W. Bromley, 2008). Despite the differences in cost of coproduction, there will be increases in pump prices. This is mainly because the summer driving season is at the corner, maintenance costs as most companies are closing for maintenance and the companies are changing to producing the summer blends.

 

All over the country, the prices of gas are hitting high and can be noticed thrice in history and not such early in this year. For the last one week, the average price of a gallon of unleaded gas nationally has increased to more than $3.40. With the current trend, analysts are predicting that Americans will pay up to $5 a gallon before the start of the summer driving season (International EnergyAgency, 2005). Therefore the Americans should get prepared to deep down to their pockets for extra money to spend in the start of this summer as the price of gasoline will hit a $5 dollar mark.

Read 1121 times Last modified on Saturday, 02 August 2014 09:51
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You are here: Home Blog Reason for increase in price of gasoline in summer season