Gas prices jump again -- and there's no end in sight

Published: February 18, 2013 

After months of lower gasoline prices, the cost of fuel has jumped dramatically over the last few days.

And experts say that it's likely to keep going up, possibly over $4 a gallon.

Gas prices were $3.54 a gallon at some stations in the metro-east early last week. By the middle of the week they jumped to $3.69 a gallon and by Sunday stations were charging as much as $3.83 a gallon. That went up to $3.89 a gallon Sunday night into Monday morning.

"All of the pundits were saying that we were going to pay less for gas in 2013 than we did in 2012," said Mike Right, spokesman for the American Automobile Association. "And, like with a lot of predications, they were right for a while. But we've had some circumstances that have sort of piled on top of each other. And I'm not so sure that it's going to turn around soon."

Right said oil refineries in the United States had been working at a high capacity and that some facilities were recently cut back or shut down to allow maintenance and repairs to be done. Meanwhile, the price of oil has shot up to about $3.11 a gallon. Right said wholesale prices hadn't been that high in a year.

What hasn't happened yet is the introduction of summer blend fuel, which can cost 10 to 20 cents more per gallon than winter fuel.

"The summer blend fuel doesn't usually make it into stations' tanks until April," Right said. "So when that happens we'll probably see another jump. That will be another factor to pile on."

According to gasbuddy.com, a website that uses consumer reports to monitor gas prices across the country, the average price of fuel in Illinois is $3.942 a gallon while the average price is $3.688 nationwide.

Jeff Lenard, spokesman for the National Association of Convenience Stores, said since 2000 that gas typically goes up about 50 cents from the first week of February until the peak price of summer is reached. Nationally, gas averaged $3.54 the first week of February, which is about 15 cents less than it cost in the metro-east. That would suggest a $4.04 peak prices this summer -- or about $4.19 in St. Clair and Madison counties.

"One of the misperceptions is that the guy selling the gas is responsible for the high prices and that they benefit from the price increasing," Lenard said. "Actually, neither is true. When a retailer gets his shipment and the price has gone up a nickel a gallon but he looks around and sees that everyone else is selling gas for about the same price as him, he can't raise the price a full nickel or he's going to lose customers to his competitors."

Because of that, Lenard said, gas prices average about 17 cents a gallon profit per gallon when fuel is cheap. When prices are high and they feel pressure from consumers to keep costs low, that average margin shrinks to 12 cents.

"Plus people have less money to come inside the store to buy a sandwich, a drink or a lottery ticket, so revenue goes down in other ways, too," Lenard said. "There's no one who wants to see fuel prices low more than the retailer."

Lenard said it is a popular belief that gas stations have a big supply of fuel in their tanks and that they raise prices on gas they bought at a lower cost days or weeks earlier. But he said that's not true. He said retailers get their fuel replenished somewhere between three or four times a week, daily or even more than once a day based on how busy they are.

"Not only do times get tougher for retailers when wholesale prices are high," Lenard said. "But then everybody is mad at them because they raised their prices. Studies show people will go out of their way to go where gas is even a penny cheaper -- even though they'll only save about 10 cents a tank."

Contact reporter Scott Wuerz at swuerz@bnd.com or call 239-2626.

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