Transportation
4:15 pm
Mon August 13, 2012

Gas Prices Up, Up, Up

Drivers have probably been noticing an upward spike in gasoline prices, and consumers might not see relief until October.  According to Gregg Laskowski, senior petroleum analyst for GasBuddy.com, the average price in Pittsburgh today is $3.67 a gallon which is up 4.5 cents in the past week and 32 cents “believe it or not” just in the past month. The national average is also $3.67 a gallon.

Laskowski said crude oil trading is around $93 a barrel, and unless that price decreases, gasoline prices will steadily rise in the coming weeks.

“Until we see that crude oil price come down, at least below $90 a barrel, I don’t think we can reasonably expect the price at the pump to come down.” Laskowski said.  “I think we’re likely to see some incremental increases over the next couple of weeks probably somewhere between 5 and 10 cents a gallon.”

Laskowski said the rise is due to a supply problem in the industry.  Up until a couple of weeks ago, refinery output was healthy around 92%, but lately crude oil and gasoline inventory has declined.

"Some of that is intentional," Laskowski said.  "Refineries are trying to draw down on their summer blend inventory in order to make the transition over to the winter blend."

Winter blend gasoline has more butane than the summer blend.  But butane, which is abundant and cheap, also evaporates easily, especially in warm temperatures, causing higher levels of ozone. 

Laskowski adds that unforeseen and unplanned events still attribute to the supply problem though.  He said the Chevron refinery fire in California at the beginning of the month contributed to supply problems in the mid-west and the west coast.  He said it was impossible to determine if the nationwide drought contributed to the increase in gas prices, but said it could be a contributing factor.

Laskowski says the October 1st switch from summer blend to winter blend gasoline is good news for the consumer.

"That transition means lower prices," Laskowski said.  "The winter blend gasoline is a cheaper gas to produce, some of that savings is passed onto the consumer, and this occurs at a time of year when consumer demand is generally unremarkable."

Laskowski said October prices at the pump will be lower, possibly the lowest consumers see all year.

Compared to last year at this time, gas prices are only slightly higher.

"Nationwide we're only about 6 cents a gallon more than where we were a year ago on this date," Laskowski said.  "In Pittsburgh, it's about the same.  The average price today in Pittsburgh is just about 4 cents more than where we were a year ago."

The city with the cheapest gasoline is El Paso at $3.22 a gallon; the most expensive is Chicago at $4.24 a gallon.