Explain to me the gas prices.

August 12, 2015 7:04 AM

In December, gasoline was 50 cents cheaper per gallon in the Kansas City, Missouri area than where I live in North Carolina. Today, the prices are the same. Why?

North Carolina did reduce its gas tax in January, but only by 1.5¢ per gallon. It's still 20¢ per gallon higher than Missouri's.

What other factors go into regional gas price fluctuations? Why is Missouri's gas so much expensive than it was a few months ago?

posted by something something to Grab Bag (9 answers total)

Is it possibly related to higher ethanol levels in midwestern winter time gas (assumes that in NC there is no such thing as winter formula gas)?

http://auto.howstuffworks.com/fuel-efficiency/fuel-consumption/summer-fuel1.htm
posted by Exceptional_Hubris at 7:19 AM on August 12, 2015

Best answer: Because you get your gasoline from different refineries and those refineries might get they're crude oil from different sources are different prices. There are also differences in required formulations like the ethanol content and what not.
posted by JPD at 7:33 AM on August 12, 2015 [1 favorite]

Not sure if this would apply to a wider geographical area like a large city, a state, or a region, but wouldn't market forces play a role? If the station across the street raises/lowers their price, the rest of the stations nearby start to do the same, and eventually the price in a certain area is wildly different from that of another area. I suspect that this isn't a significant part of the story in this case, but I thought I'd throw it out there anyway.
posted by SuperSquirrel at 7:42 AM on August 12, 2015 [1 favorite]

Transit from the refineries also has to be considered; around the gulf coast there's lots of refineries and import services for refined products. From pipeline, train and truck it will move outward, and the delivery isn't free. Even if gas is refined in NC, the raw product needs to get there. Also remember that like transit, terminal services aren't free - I'd imagine that part of why some terminals get more use will be better access to transport (especially pipelines), proximity to refineries, etc but terminal fees may also weigh into that.

Additionally, most states have slightly different blending standards for what they require for gasoline (I thought that there's something like 15-20 different blends sold in the 48 contiguous states, I didn't find a great cite; but this says 55-70 blends!). Yes, it will all work in the same cars, but the standards for air quality, based upon expected average air temperature will change the price of the refined fuel. It could be that you're buying a more expensive product (in addition, to any transit costs and potentially different terminal/refinery costs).

You're of course welcome to rent a tanker truck, load up on cheap gas, and truck it back. But like Kramer and Newman, I feel that you won't come out ahead on the run (and they ever had a free mail truck to use and didn't count the cost of their time), which is why the costs are different.
posted by nobeagle at 8:16 AM on August 12, 2015

Best answer: Because you get your gasoline from different refineries and those refineries might get they're crude oil from different sources are different prices.

And the margin those refineries make is determined by the crack spread (yeah, yeah - LOL).

Some refineries may have hedged against price fluctuations by locking in a certain crack spread. When those hedges expire, you could have a jump or drop in the price, depending on what's happening with demand vs. the price of crude and any cost inputs to the refining process.
posted by mandolin conspiracy at 9:13 AM on August 12, 2015 [2 favorites]

I know the St. Louis used to get (I assume still does) a special blend of gas in the summers to reduce smog. Perhaps the same is true for KC.
posted by LoveHam at 10:44 AM on August 12, 2015

I don't know about Kansas City specifically, but in many parts of the US much more driving is done in the summer than the winter. See many RVs on the road in the summer? That's an area that is having a lot of tourist traffic -- which won't all be in RVs.
posted by yohko at 1:51 PM on August 12, 2015

It could be related to Zone Pricing. I do not understand it exactly, but here is a report from the Connecticut State Legislature on it and how it affects their state as well as nationally.

I think it would be worthwhile if you are interested in various gas pricing either within a local region and interstate, it is worth researching and understanding zone pricing.
posted by AugustWest at 9:58 PM on August 12, 2015

Best answer: To put some specifics behind what others have said, just today the NYT published this article about how problems at BP's refinery in Indiana is causing prices to spike in the Midwest.

The jist is this:

Since a mechanical breakdown at BP’s refinery in Whiting, Ind., on Saturday, the wholesale price of gasoline has climbed 50 to 80 cents a gallon in a region that stretches from Great Lakes states like Michigan to as far south as parts of Kansas and Oklahoma.

posted by mullacc at 11:10 AM on August 14, 2015