Why summer gas is more expensive than winter gas
Patrick De Haan, head of petroleum analysis at GasBuddy, joins TheStreet to discuss why prices at the pump are more expensive in the summer.
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00:00 Can you explain why summer gas is more expensive than winter blend gasoline?
00:05 A lot of what is in winter gasoline is more volatile.
00:09 Butane being the key difference here.
00:11 Winter gasoline has a lot more butane.
00:13 Butane is plentiful, it's cheap, it's really going for less than a dollar a gallon and
00:18 when you put so much butane in that winter gasoline, you basically pull down the price.
00:23 Now in summer, there are different oxygen that's replacing butane.
00:27 Butane is one of those things that's more volatile, it doesn't work as well in warmer
00:31 weather and it causes more emissions.
00:33 So butane comes out, there are other oxygenates to replace it, those oxygenates generally
00:39 more expensive and thus the price.
00:41 But half of it really is not the difference in components, but it's the logistical challenge
00:46 of getting these summer blends to where they need to go.
00:49 There are multiple different blends in use.
00:53 Some states have several different blends of summer gasoline.
00:55 So the other part of it is a logistical challenge to supply all of these blends.
01:01 As we're having this conversation, Patrick, towards the end of the month of February,
01:05 is it your expectation that we will see gas prices continue to go higher in the weeks
01:09 and months ahead, I wonder?
01:12 I think that at least for now, we've seen a little bit of a pullback in the price of
01:16 wholesale gasoline.
01:17 I think mid-February, we shouldn't see the biggest increases.
01:21 But once we start to get to March and April, really kind of the climax of refinery maintenance
01:26 and that transition over to summer gasoline, I do expect some pretty noticeable increases.
01:31 Though I think that by the time Memorial Day rolls around, we should start to see prices
01:35 cooling still between now and then.
01:37 We could see increases of anywhere from 25 to 50 cents a gallon.
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