Gasoline Prices Continue to Rise

Gasoline Prices Continue to Rise

What usually comes to mind when we hear “spring” is the picture of a green meadow with beautiful blooming flowers.  But another creepy scene comes along — prices of gasoline gets more expensive.

It is worse than usual this year wherein the average price of gasoline could surpass $4 per gallon nationwide as early as this week.

Why the seasonal rise? It is the time of year refineries reduce output to repair equipment and start making a cleaner, more expensive blend of gasoline for summer.

Since 2000, gas prices have risen yearly between early February and late May which boosted prices by 27 percent on average, according to the National Association of Convenience Stores. This year, prices have risen 14 percent, or 48 cents per gallon, since Feb. 1.

Gasoline was expensive even before the seasonal run-up. Strong global demand, worsened situations with Iran and a bit of supply disruptions have kept crude oil prices elevated for months.

This year's spring heave is more extreme than usual because three refineries that serve the East Coast were shut down last fall and another one may be closed by July. That's providing a threat to the supplies in one of the country's most populated regions, and pushing prices higher everywhere.

Demand for gasoline tends to drop off in winter which makes it the perfect time for refineries to get ready for summer, when the objective is to produce as much fuel as possible. The catch is that the refining industry's version of spring cleaning causes supplies to reduce and prices to rise.

To protect themselves against this possibility, energy traders buy wholesale gasoline futures on financial exchanges. That pushes wholesale gasoline prices up. And higher wholesale prices mean higher retail prices.

Posted by James Fried on Tuesday April 10 2012, 3:09 AM EDT. Ref: CNN. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0