Gas prices could soon fall after switch to summer-blend fuel
The annual switch to a pricier variety of gas known as summer blend is almost complete — meaning prices at the pump are likely peaking and could fall before beach season begins.
Why it matters: Summer blend fuel, a higher grade of gas, can add up to 15 cents per gallon in the spring, according to NACS, the trade organization for fuel and convenience stores.
- That's in addition to price increases that come with seasonal demand, which can vary from 5 to 15 cents per gallon.
- Since 2020, gas prices have increased seasonally about 50 cents from a low at the beginning of February to the seasonal high in May, the group estimates.
The big picture: Over the last 10 years, the average date summer gas prices have peaked nationally has been May 2, Patrick De Haan, head of petroleum analysis at GasBuddy, told Axios.
- "While I'm not yet ready to say 'hey, we're done with the increases,' we're getting close," De Haan said in an interview last week. "We're going to peak I believe in the next few weeks and we may not go much higher."
- It's possible prices could push $3.80 or $3.90 a gallon nationally, De Haan said, and $4 gas could return later this summer if there's a hurricane or refinery issue.
- "We are going to see probably pretty large gas deflation from now through hurricane season," AAA spokesperson Andrew Gross told Axios of gas prices nationally.
Summer prices could average about $3.50 per gallon, 80 cents less per gallon than last summer, the U.S. Energy Information Administration estimates.
- The price for a gallon of regular unleaded was $3.646 Wednesday, down from $3.684 a week ago, according to AAA data. Wednesday’s prices were up nearly 21 cents from a month ago.
Why the change to summer fuel
Gasoline has a greater chance of evaporating from cars during the warmer months of summer, which can create smog and exhaust. In 1990, Congress amended the Clean Air Act to require an annual switch to summer-blend gas.
- To cut down on pollution, the EPA requires petroleum refiners to reduce the "vapor pressure" of gasoline during the summer.
- "This type of gasoline is required in the warmer months because it helps or contributes to less low-level ozone," De Haan said.
- It burns cleaner with lower emissions, he said, adding it's critical "when hotter temperatures can interact with the exhaust off of the vehicles to create low-level ozone that is unhealthy for sensitive groups and others."
There are different blends of summer gasoline and it depends where you live on the kind you'll find at the pump.
- Big cities including New York, Chicago, St. Louis and Los Angeles have a more stringent type called reformulated summer gasoline, De Haan said.
Summer gas prices: Why it costs more
Summer gas is already in pumps across the country even though we are months from the official change in season.
- Fuel terminals are required to sell only summer gasoline on May 1, while gas stations have until June 1 to complete the changeover to summer gasoline.
- Retailers must sell summer-blend gas from June 1 to Sept. 15, which is required under the Clean Air Act's 1990 amendments, but most switch over early.
There are a few reasons why prices rise every spring, De Haan said.
- Typically there is rising demand as Americans want to go outside more.
- Refineries do maintenance in the spring, which means they shut down portions of facilities and produce less gas.
- And then there's the switch to summer gasoline. "Cleaner components, things that are better for the environment are often slightly more expensive," De Haan said.
OPEC's unexpected production cuts earlier this month also caused the price of gas to go up, De Haan said.
What's next: Relief should be on the way to the pump before Memorial Day.
- "Typically, the summer is frontloaded and the highest prices are before or just as summer starts," De Haan said. " The lowest prices are as summer is setting in September because the supply of gasoline builds up over the course of the summer."
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