You wish you could quit, but you can’t.
There it is, on the street corner: gasoline. It was cheaper when you started, but you need it to keep going, and the price just keeps heading up, taking a bigger cut of the household income.
Around Christmas, local gas prices were below $3.20 — but then they started inching up. Prices leveled off during late January, but since the beginning of February it’s hard to keep track with the cost of a gallon of regular unleaded, even for the stations themselves.
Late Wednesday afternoon, Victor Kosinski pulled into the Kangaroo on Plaza Boulevard and Herritage Street looking to fill up his tank.
“They had $3.79 on the marquee, and when I was pumping the gas, I didn’t realize that they actually had a different cost for the gas on the pump,” Kosinski said. “I just grabbed the pump to put in the car, and I was in a hurry, and didn’t realize it was $3.86. I mentioned that to the person behind the counter, and she said about 40 minutes before I pumped my gas, the company made the change at the corporate level.”
According to GasBuddy.com, regular unleaded prices in the Kinston area as of late Friday afternoon ranged from $3.73 to $4.25.
Kosinski continued, “I wasn’t very happy about that, but there wasn’t much I could do about it at that time. Then, overnight, I saw on the sign they made it $3.90-something, but you couldn’t tell what it was. A little later that same morning, they changed it to $3.95. So, the gas jumped from $3.79 to $3.95 in less than 16 hours.”
And while Lenoir County has some of the highest overall prices of any county in the region, it could be worse.
“As troubling as that may seem, believe it or not, there are a couple of markets in the U.S. where they’ve seen prices go up by more than 60 cents a gallon during the same period,” GasBuddy.com Senior Petroleum Analyst Gregg Laskoski said. “Chicago, Detroit and I think Miami have seen similar increases. It’s just extraordinary. At the same time, while the North Carolina average is $3.79, the U.S. average is $3.72, and a month ago it was $3.28.”
Last year, the trend was similar — prices bottoming out in late December, then rising through the rest of the winter and into the spring. The issue, it turns out, is refinery capacity. The federal Environmental Protection Agency mandates refineries make a summer-blend gasoline, which is supposed to be a purer blend with less volatile organic compounds.
VOCs tend to evaporate quicker and are worse for the environment, hence the reformulation. Since those compounds don’t evaporate as easily during winter, there’s a cheaper, less-pure winter-blend gasoline. Though, depending on regulations and average temperatures state-by-state, the gas you’d buy in Central Florida isn’t the same as what you’d put in your tank in Western New York.
Generally, refineries distribute summer-blend gas from May 1 to Sept. 30, and vice-versa for the winter blend. Of course, that means a transition period in which supply tightens up.
“At this time of year, what happens is the refineries are all basically trying to do the same thing at the same time, and it requires them to shut down part of their operations,” Laskoski said. “What they’re doing, they’re trying to reduce their inventory of winter-blend gasoline so they can get ready to produce the summer-blend gasoline.
“The two are totally different formulations, so it’s not like you can just take a couple of additives and add it to the winter-blend gas, and now, all of a sudden, you have summer-blend gas.”
Also, since it’s prudent to conduct annual maintenance during a transition period, that’s underway as well. Nationally, from Dec. 19 to Thursday, refining capacity dropped from 91 percent to 82 percent. East Coast refineries are running at 72 percent capacity and Gulf Coast refineries dropped from 96 percent capacity to 81 percent. There’s less gas to go around.
And that’s even with a drop in demand. As prices have gone up from the heady days of sub-$1-a-gallon gas in the last ’90s, Americans have cut back in the amount used. But global demand stepped in and more than filled the gap.
“While U.S. exports of petroleum products continue at a robust level, the relationship between product exports and domestic gasoline prices is quite complex and exports do not appear to be contributing to rising U.S. pump prices since the start of the year,” said the U.S. Energy Information Administration in the latest edition of This Week in Petroleum.
It continued, “As U.S. demand for gasoline and distillate has declined, robust global demand for petroleum products has provided Gulf Coast refineries with an export market for gasoline and distillate produced using capacity that would otherwise have been operated at lower utilization rates.”
And don’t look for prices to come down any time soon. Statewide regular unleaded prices peaked at $3.91 a gallon in April of 2011, just as the switch-over to summer-blend gasoline was starting. Prices fell until late June.
“We’re projecting that prices will peak in April, with the national average between $3.80 and $3.95,” Laskoski said. “After the peak, we think the prices are only going to come down gradually — we’re not going to see a sudden drop in gas prices, because we (would be) at the beginning of summer driving season. That’s when consumer demand is greatest, so realistically, it could be a year that’s similar to last year, when we saw elevated prices for much of the summer.”
It’s a hard habit to break.
Breakout Box
Average Price per gallon for regular unleaded gasoline
North Carolina
Now: $3.79
1 month ago: $3.35
1 year ago: $3.67
United States
Now: $3.72
1 month ago: $3.28
1 year ago: $3.57
Wes Wolfe can be reached at 252-559-1075 or wes.wolfe@kinston.com. Follow him on Twitter @WolfeReports.