It was bound to happen: Just as the summer driving season is set to begin, gasoline hits $3 a gallon.
The good news is, prices are not expected to continue rising much higher after Memorial Day.
As the price of unleaded gas has reached $2.99 a gallon at many area gas stations in the metro-east, analysts believe that the recent surge in prices at the pump is due to the switch to more expensive summer gas blends, which are mandated to meet federal emissions standards.
Patrick DeHaan, a senior petroleum analyst with price tracking website GasBuddy.com, said this reformulated gasoline costs about 37 more per gallon.
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He said that a refinery in northern Illinois has also contributed to the recent spike in metro-east prices. He said the Exxon Mobil refinery in Joliet, which produces the reformulated gasoline required in the St. Louis and Chicago areas, recently filed a notice with Illinois regulators about a chemical flare at the refinery that has interrupted production.
“An unexpected refinery issue has developed and has caused a drop in available supply,” DeHaan said. “Essentially, it is not unlike the housing market. When there are fewer houses, prices go up.”
Prices had crept up to $2.60 a gallon or higher in recent days, but DeHaan said not all regions in Illinois are experiencing price increases as much as the greater St. Louis area. He said that gas stations outside of the St. Louis and Chicago metropolitan areas are seeing lower gas prices right now.
AAA-St. Louis spokesman Mike Right said he believes the recent price hike is temporary as market conditions indicate that crude prices and wholesale gasoline prices still remain historically low.
“I suspect that it is more of a glitch in the industry,” Right said. “Reformulated gas prices have been moving upward, but not to the extent that we’re seeing in the St. Louis area. I think it may have to do with reformulated gas that has come in to the area.”
Last fall, metro-east gas prices fell below $3 a gallon for the first time since December 2010 and eventually fell below $2 per gallon for a brief time before rising above that mark after the new year. Prices have remained relatively low as supply has outpaced demand, crude oil prices have fallen and domestic petroleum production has reached its highest level in three decades.
Right does not expect local fuel costs to rise much further past $3 a gallon because the summer blend conversion and seasonal maintenance at refineries should be completed.
“I don’t think you will see $2 a gallon, but I also don’t think we will see $3 plus,” Right said. “I think that by this time next month, we may see gas selling 10 to 15 cents less per gallon than what we’re seeing now.”
Contact reporter Will Buss at email@example.com or 618-239-2526.
At a glance
Average cost per gallon of regular unleaded gasoline in the metro east:
May 13, 2014