It’s the time of year that gas prices start their annual climb. There are several reasons for the increase, with the most prominent being environmental regulations. EPA’s controls and prohibitions on gasoline volatility are outlined in 40 CFR Part 80.27, which sets forth a regulatory control period of May 1 through September 15 for the wholesale petroleum industry. Leading up to the start of the regulatory control period, refiners are forced to transition their stock from winter blend to summer blend gasoline to comply with the gasoline Reid Vapor Pressure requirements. The transition leads to increased production costs, which leads to higher prices. The patchwork of summer-blend fuels requirements places enormous stress on the fuels distribution system each spring.
It’s often easy to have gas; the challenge is to have the right gas at the right geographic location. Historically, prices begin to retreat shortly after Memorial Day when the regulatory control period for retail stations takes effect June 1 and the summer blend gasoline transition is complete.
Other pricing impacts include:
Price of crude oil.
People traveling more seasonally leads to increased demand and there is a fixed quantity of gasoline produced to meet demand during that season.
Summer fuel doesn’t provide the same mileage as winter fuel, meaning it takes more fuel to travel the same miles and increasing demand leads to higher market prices.
There is not just one summer blend. Each state has their own standard, and in certain circumstances, designated geographic areas within a state may have different standards to meet under the law. Additionally, some major cities even have their own unique formulation to address local air pollution. These summer blend gasoline regulations make it difficult to ship fuel from surplus areas that can help moderate price spikes.
Switching from one seasonal blend to another is costly for petroleum refiners.