Each year the EPA mandates that gasoline sold during the summer months have a maximum vapor pressure of either 7 or 7.8 psi (pounds per square inch). The vapor pressure is measured for gasoline at 100 degrees F.
During the winter months, gasoline may have a vapor pressure of 9 psi or higher. During the summer, which is defined as June 1 to September 15, the lower vapor pressure gasoline is blended. Summer gasoline production starts well before the summer season so the refiners can be sure all of the winter gasoline in the distribution system has been cleaned out and replaced with summer blend.
The reason for this change is that during the summer months, gasoline with a high vapor pressure will release gasoline vapors into the air, causing smog in many cities. A lower vapor pressure reduces the amount of gasoline vapor emitted. This results in cleaner air.
Refineries blend gasoline and during the winter can add a lot of butane to their gasoline blend. Butane is cheaper than gasoline so this lowers the price.During the summer refiners are more restricted in what they can blend into their gasoline because they have to keep the vapor pressure low. Butane has a very high vapor pressure so they can't use butane and have to use more crude oil for each gallon of gasoline. This means the summer blend costs more to make, up to about 10 cents per gallon.
Part of the increase in gasoline prices has been the seasonal effect of the summer blend on pump prices. Prices typically will climb until after Memorial Day. Higher prices for gasoline are ahead this summer, just in time for the peak driving season. Prices should start falling in September as the amount of driving decreases and the refiners move back to a cheaper winter blend.
This seasonal trend in gasoline prices is only part of the increase we have seen in gasoline prices lately. Prices of crude oil have risen because of tight supplies of oil, particularly the light sweet grades. The problems in Libya have taken about 1.2 million barrels per day of light sweet crude oil off the market. The restrictions on U.S. drilling are further decreasing the amount of oil on the market.
The price of oil is set on the world market. The elasticity of demand for oil is very inelastic, meaning small changes in supply or demand can result in very large price changes. Look for gasoline prices to continue rising into the summer before hopefully retreating some in the fall.
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