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No, Seriously: When Will Gas Prices Drop?

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A month ago, Americans paid an average of $3.69 for a gallon of unleaded regular gasoline. Today, we're paying $3.84. 

What gives? Isn't this the time of year when gas prices are supposed to drop -- when companies stop manufacturing expensive summer-blend fuel and transition to more affordable winter blend?

Ordinarily, yes, but this year, we've hit a couple of speed bumps.

The biggest of those bumps was Hurricane Isaac. On the Saffir-Simpson scale, Isaac was a fairly minor storm, far less powerful than monster hurricanes like Katrina or -- for those of a certain age -- Camille. 

However, Isaac did its best to disrupt oil production in the Gulf of Mexico, which made analysts worry.

And that's where the problem lies, because ultimately, analysts' fears and enthusiasm hold far more sway over oil and gas prices than they should. After all, the Gulf of Mexico isn't the only place where oil is extracted, and Southern states like Louisiana and Mississippi aren't the only places where it's refined. But when analysts see a giant, swirling, meteorological mass in the Gulf, they often panic, and the rest of us pay for it at the pump.

It didn't help that Isaac hit just before Labor Day weekend. Shutting down oil rigs and refineries during a major travel holiday caused fuel prices to climb further than they might've if Issac had struck a week later.

The good news is that many of the Gulf's rigs and refineries are up and running again, which should calm analysts' nerves and bring gas prices down. The first to see relief will be those who live closest to the refineries in the Deep South. Folks in the far West, northern Midwest, and New England, will have to wait a bit longer.

But we're not entirely out of the woods yet. The earliest on-sale date for winter-blend gasoline is this Saturday, September 15, but temperatures have been remarkably high this summer, breaking all-time records in many places. (FWIW, Wisconsin got the worst of it, followed by Iowa, Missouri, Indiana, and Minnesota.) Though some areas have seen the mercury dip in recent days, high temps may linger in other parts of the U.S., which could delay the roll-out of winter blend.

We can also blame Isaac for that delay: fuel companies produced a lot of summer-blend gasoline, and Isaac disrupted their ability to distribute it. Until it's used up, most companies won't make the switch to winter-blend gasoline. (Unlike summer-blend, which has to be on sale everywhere by June 1, it doesn't appear that winter-blend has a mandatory on-sale date.)

Have gas prices begun to slip in your neck of the woods yet? Drop us a line, or leave a note in the comments below.

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Comments (12)
  1. I've always been skeptical about fluctuations in prices at the pump. I find it interesting that at the first sign that Isaac would enter the gulf, prices everywhere rose. Now that it's passed and the refineries are operational, why aren't prices lowering just as fast? I'm certain that gas prices are a complicated matter, but there seems to be no obvious logic, or accountability, for fluctuations.
     
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  2. Meanwhile, have you heard either Presidential candidate mention how they're committed to getting Wall Street out of the oil speculation business?
     
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  3. We're all being trained :-) $3.69 would seem cheap now and anything below $4 will be god sent next year. Exxon would fail if it didn't grow its profits every quarter and our consumption is falling every year, so the equation is rather simple.
     
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  4. ONLY $3.84? Come to Connecticut! We're paying $3.99 and that's at the cheap no-name gas station! Hang in there! You KNOW prices will DROP just before election! It's ALL a game!
     
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  5. Why would it drop before the elections? Since when do the oil corporations support Obama (even though they should since he's expanded drilling more than any other president)?
     
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  6. When the demand for gas decreases the price will go down. It doesn't make any sense trying to find a logical explanation because there isn't any. Gas prices are not regulated by any agency that sets national standards or whatever, that's all. Another thing that will go without logic or common sense is why the price of Diesel is higher than the price of gasoline(petrol), and whatever the reason behind that is, it seems to only happen here in US. BTW that's not the way it is in Europe or Latin America. I drive a 2012 Prius today and I'm using one half the amount of gas I used to. If the rest of the drivers did the same, then producers would have to either cut production by half or selling the extra at a lower price, which is what I find more
     
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  7. likely to happen. You will see that plus millions of incentives to bring you back to using gas guzzlers.
     
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  8. I must add that its similarly crazy over here. Also: Its $9.50/Gallon here. Stop your winging, former colony.
     
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  9. @Matthew: How far is the average commute over there in the former colonist country? Over here it may range from 60 to 160 miles
     
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  10. It never ceases t amaze me the excuses they (oil companies) use to justify raising the pump price. The wall street traders and speculators need roemoved from the oil market. No one should be allowed to play fast and loose with a commodity needed by millions for every day life.
     
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  11. Still $4.20+ per gallon around Chicago...I'd be happy to see $3.70 again.
     
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  12. $3.84? Ppppfffftttt! I'm paying $4.62 here! I'd kill for something under $4. I agree with Jan Durzynski, we are being trained. They have to progressively raise prices to make money as the Dollar continues to lose its value. Otherwise, we'd still be paying 25cents a gallon.
     
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