by Beth Conahan
The mercury is rising in the thermometer and gas prices are rising at the station. In an unprecedented two-week jump, the national average at the pump has risen to $1.66 per gallon. That’s an increase of 12 cents, according to the Energy Information Administration, a division of the U.S. Department of Energy.
This 8.4 percent rise is the largest two-week jump since the federal government began keeping track in 1963.
Prices rise every summer but this year the increase has come earlier than it ever has causing concern over how the prices will behave as the summer continues. Analysts predict that at the peak-driving season, the nation will experience another increase of up to 20 cents, reaching a high of three dollars per gallon in California and in cities like Chicago and Milwaukee.
The price of gasoline increases every summer due to environmental protection requirements that are implemented each spring and summer. Motor gasoline is required to be a blend that produces less smog. This blend of gasoline is cleaner burning, reformulated gas, or RFG.
RFG is more expensive because it needs separate storage and distribution channels but is required in the major cities during the summer.
RFG is most often produced on the East Coast and in Texas in special refineries. However, environmental regulations make it difficult to build refineries. No new refineries have been built in the United States in more than 20 years.
Adding to the price rise is the increase in demand. In the last year, Americans bought 3.5 million new, gas guzzling sports utility vehicles, an increase of 9.3 percent from 1999, according to the Autodata Corp., a Woodcliff, NJ-based automotive marketing consulting firm. For every five vehicles sold, one was an SUV.
The annual increase has arrived and thanks to an increase in demand and an inadequate number of refineries, it’s bigger than it’s ever been. California and the midwestern cities will be affected the most by the increase, paying high at the pump because of a shortage in RFG gas. The Southeast will be least affected due to fewer taxes and plenty of refineries in the region. The rest of the East Coast will experience only moderate increases.