Spring gasoline price spike ends early, as demand drops

It’s a traditional rite of spring, like cherry blossoms in Washington D.C. or dust storms in the Permian Basin.

But this year’s gasoline price spike started early and appears to have ended early.

“More of a whimper than a bang,” said Tom Kloza, chief oil analyst for the Oil Price Information Service.

The U.S. Energy Information Administration Monday reported that gasoline prices nationally rose 16 percent between Dec. 17 and Feb. 25, smaller than the price increase in nine of the previous 10 years.

More relief: Lower summer gasoline prices in forecast

And prices fell by 24 cents a gallon between Feb. 25 and April 15.

By Tuesday, the average price nationally for a gallon of regular unleaded gasoline was $3.51, according to AAA. In Houston, the average price was $3.40 a gallon, or a drop of 15 cents over the past month. Houston had the highest average in the state, according to AAA.

Gasoline prices traditionally spike from winter lows through much of the first half of the year. Among the reasons:

  •  Peak refinery maintenance season occurs during the first quarter of the year before gasoline demand hits summer levels.
  •  Switch to summer-grade gasoline. Refiners switch to producing summer-grade blends, which are more expensive to make and result in higher prices at the pump.
  •  Higher crude prices. The price of Brent crude increased by nearly $12 a barrel between Dec. 7 and Feb. 8.

The Energy Information Administration report released Monday notes that gasoline prices generally increase through May, tapering off just as people begin to drive more for summer vacations. It doesn’t offer a reason for the apparent early end to this year’s price spike.

The drop hasn’t been true everywhere — prices are still rising in the Great Lakes region. Drivers in Chicago, for example, were paying $4.03 a gallon Tuesday.

Doug Shupe, a spokesman for AAA in Texas and New Mexico, said his organization had noticed that refineries had completed scheduled maintenance earlier than in previous years.

Going green: Not ready for slime time: Algae present challenges as fuel source

Kloza also suggested the drop in demand over the past year has impacted the industry.

“It has really dropped in the last six, seven or eight weeks, to where one wonders if there is something happening,” he said.

Last week, the Energy Information Administration estimated gasoline demand at 8.4 million barrels a day, or about 353 million gallons, Kloza said.

In April 2011, that was 391 million gallons a day, he said.

“The question is, why is demand so unspectacular,” he said. “If we thought it was because people are making more responsible choices in vehicles, because mass transit had improved, because people are consolidating trips, those might add up to good reasons. But I think there’s a suspicion that maybe … there’s still a malaise out there in terms of people driving, in discretionary driving.”