There are certainly a lot of reasons that the price has been going up all over, but there are some particular reasons that some of the midwest states are the hardest hit:
1) Phase 2 of the reformulated gas started June 1 of this year, I believe. It's a more difficult and expensive RFG to make than phase 1.
2) A pipeline delivering oil to the midwest had a corroded, leaking spot, so oil supply was limited to those midwestern states( back in March, I believe). Due to the upcoming reduced supply, St. Louis asked for( and received) a waiver from the EPA to allow them to use regular gas, as well as RFG, to help defray the cost up front. The repairs are almost completed, and oil supply should be increasing to standard levels very soon.
3) The ethanol subsidies to make gasohol in the midwest. It takes some time to manufacture ethanol anyway. Add that to the new phase 2 RFG. Factor in the reduced number of refineries in the midwest due to increased regulations/reduced profits over couple of decades. You have now restricted supply even further.
4) It's summer. If past experience is any kind of teacher, demand for gas goes up as people travel more during this time of year. The oil companies usually take advantage of the increased demand by raising the prices a little.
Much of the reduced supply has been caused either durectly or indirectly( closed refineries) by increased regulations. Combine that with the increased demand, and bingo! TIme for a Congressional investigation. The next time the Secretary of Energy acts puzzled about the price increases in the 5 midwest states hardest hit, someone should point him towards his department's website: that's where I found most of the information about the reduced oil supply from the pipeline problem to the midwest. |
