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Every year, as the summer season approaches, gasoline refineries switch to their more expensive summer blends, causing an increase in the price of gasoline.
However, this year, the seasonal price increase is particularly high. Experts are saying that U.S. gas prices are nudging higher because Gulf Coast refineries are sending more gasoline to other countries.
NPR’s Senior Business Editor Marilyn Geewax joins Here & Now’s Jeremy Hobson to discuss the factors contributing to the soaring price of gasoline, and whether or not this trend will continue.
JEREMY HOBSON, HOST:
This is HERE AND NOW from NPR and WBUR Boston. I'm Jeremy Hobson.
And as of today, the average price of a gallon of regular unleaded gas is $3.69. That is up 16 cents from a month ago, and it's not that surprising given that gas prices tend to go up at this time of year as refineries switch to their more expensive summer blends. But this year, the seasonal price increases gone even higher even though there is plenty of oil supply in this country.
Joining us now from Washington to tell us what is going on is NPR senior business editor Marilyn Geewax. Marilyn, welcome.
MARILYN GEEWAX, BYLINE: Hi, Jeremy.
HOBSON: So what's happening?
GEEWAX: Well, it's springtime, and for me, that means two things: number one, my allergies are terrible, and number two...
HOBSON: Mine too.
GEEWAX: ...gas prices are rising. And they do this every year, so it's not really a big surprise there. But on the other hand, they're going up more than you would expect, really. Oil supplies have been very good, so you would think that prices might not hike all that much. And yet we're about 4 or 5 percent higher than we were last year, and it's up about 17 cents just from a month ago. So, you know, something is happening out there. And I made a bunch of phone calls trying to talk to experts about what's going on, and they tell me it's all about exports.
HOBSON: Yeah. We're sending our oil to other countries.
GEEWAX: Well, not exactly. Here's the thing. In the United States, oil can't be shipped out readily. There are restrictions on oil exports. But there are not these same kinds of restrictions on gasoline exports. So what's happening is all that oil that we're pumping in Texas, in North Dakota and whatnot is getting down to the Gulf Coast refineries. And they turn it into gasoline or diesel, and then they export it.
And the big markets right now are - a lot of Latin American countries for a variety of reasons, their refineries have not been keeping up with the pace of demand for gasoline. So we're selling it there. Exports are up about 25 percent this year. And that's good for the companies that are doing this refining. That's, you know, a pretty logical business decision. But it does mean that there's less supply. So it's helping drive up prices for consumers of gasoline - that's you and me when we stand at the gas pump.
HOBSON: Well, why is this happening so much this year compared to years past?
GEEWAX: Something happened back in January. That's the southern portion of the Keystone pipeline. You know, we've heard all these controversies about building it - the northern portion of it. But the southern part came on line. So a lot of the gas supplies that have been building up in Oklahoma - they've been stockpiling it - it's flowing now. And the refineries feel confident that they know they've got this oil coming in, and they can really ramp up their export business. So they've had this really good, cheap, steady feedstock coming in, and they can refine it, and they can sell it, so they're moving into these more global markets.
HOBSON: So what kind of a summer are we in for when it comes to gas prices? As we said, right now, they're up from where they were about a month ago, but how much higher will they go?
GEEWAX: Well, gasoline is a tricky thing because there are all these different factors. So right now, the government is pretty much predicting - and AAA, everybody is saying that gasoline will probably be about the same this summer as it was last summer because, on the one hand, we have these factors pushing up prices. There's not only the export issue, but geopolitical concerns. That is, you know, what if Russia and Ukraine get really bad and Russia doesn't export as much oil as it otherwise would? What if things with Syria really go bad?
On the other hand, we don't have, you know, any problems at the moment with supplies. There's a lot of oil being pumped in this country. So on balance, it's should about even out. And gasoline prices are likely to be about the same by Fourth of July as they were last year.
HOBSON: And none of this, of course, will help you if you happen to go to the wrong gas station in town that happens to have gas prices that are, what, 30, 40 cents higher than they are at the other one. But we'll leave that for another show. Marilyn Geewax, NPR senior business news editor, thanks so much.
GEEWAX: You're welcome, Jeremy.
HOBSON: You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.