Gas prices in Colorado rose last week – they rose an average of 17 cents per gallon in Fort Collins from the previous week, after falling the week before.
But is this a sign of things to come?
The average price per gallon of regular gas in Fort Collins was $3.29 on Monday, according to GasBuddy.com, which tracks prices at 119 stations in Fort Collins. Statewide, the average is $3.32.
That’s a low of $2.57 at the end of January, and prices have been rising ever since.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the price rises every spring as refineries perform maintenance that slows production and then transitions to producing summer blends. Prices typically peak in April or May, he said, and throughout the summer they fall as production increases.
Moving forward across the country in the coming months, he expects prices to “remain well below record levels” and trend downward as we get closer to July 4th.
“While the Middle East, hurricane season, refinery maintenance and any other disruptions or unexpected weather conditions continue to be unpredictable, this summer appears to be particularly favorable for drivers hitting the road,” said De Haan.
But there’s another factor Coloradans should be aware of: Reformulated gas is arriving now.
Will reformulated gas increase prices in Colorado?
Starting June 1, gas stations in nine Front Range counties, including Larimer, will be required to sell this less polluting and more expensive type of gas.
This is because these counties are located in an area considered in 2022 to be in “severe” violation of ozone air quality standards by the Environmental Protection Agency. The no-go area applies to parts or all of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Jefferson, Weld and Larimer counties.
This designation triggered a requirement to sell federally approved cleaner fuel during the summer ozone season, starting this year.
Therefore, from May 1st, reformulated gas became required in refineries and gasoline terminals, which means that it is now being implemented in gas stations.
“RFG will arrive at the pump during the month of May and may be sold at some stations before the June 1 deadline, depending on your individual supply needs,” said Taylor Gillespie, director of public affairs for EPA Region 8, to the Coloradoan.
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So how much will this increase gas prices? The answer is very different depending on who you ask – 3 cents per gallon up to 60 cents per gallon with even higher peaks.
Gov. Jared Polis, in a letter to the EPA asking the agency to grant Colorado an exemption to the requirements, said prices could be expected to rise 60 cents per gallon or more.
Your letter of April 4th said the Gulf Coast, a “highly competitive region with few supply constraints,” sees a 10-cent-per-gallon premium for reformulated gas, and so Colorado can expect at least that increase.
But he also said a state-commissioned study by Energy Analysts International Inc. said the most likely scenario in Colorado is a 60-cent price increase, with peaks of up to $1 more.
The letter says that existing supply networks in Colorado are insufficient and distributors will have to take extraordinary measures to meet demand.
Colorado is geographically isolated from major Gulf Coast refineries and separated from the national distribution grid, he said, and has insufficient in-state refining capacity, so it relies on out-of-state fuel suppliers who could go out of business at any time. time.
But the EPA’s Gillespie, in an email to the Coloradoan on Sunday, said the assessment of data the agency uses estimates the potential increase in costs to be 3 to 5 cents per gallon.
“Fuel suppliers to the (Denver Metro/North Front Range) market have made the necessary preparations after years of lead time to deliver a volume of RFG in a cost-effective manner that is consistent with historical market demand,” she said.
De Haan said current observations show new gas is costing 3 cents more per gallon in the Denver area, a smaller price difference than expected. The Chicago area is seeing a price difference of 25 to 30 cents per gallon.
“I can’t fully explain why,” he said. “That would indicate to me that it’s not very difficult for them to produce this with other refineries in the region.”
He said typically the switch to reformulated gas happens well ahead of schedule because operators don’t like the idea of moving products that can’t be sold through their pipelines.
This means the gas is already in circulation, he said.
“There’s nothing drivers need to worry about,” De Haan said. “In fact, they are already pumping out, in most cases, this reformulated mix,” depending on whether they are in the no-achievement zone, he said.
However, he said, one thing to worry about is the refinery shutdown, which could create a larger price difference between reformulated and conventional gas.
He cited the winter 2022 fire that caused the closure of the Commerce City Suncor refinery.
“So you saw how dependent it is on the refinery,” De Haan said.
That refinery supplies 38% of the gas for the Denver and Front Range market, according to the Polis letter.
Gillespie said the increased cost of the redesign will be somewhat offset by the better mileage the cars will get using summer-blend fuel.
“This greater fuel efficiency also results in fewer trucks on the road to refuel at the gas station. Increased fuel efficiency and longer run times on gas-powered equipment will mean consumers have to fill up less at the pump.”
This article originally appeared in the Fort Collins Coloradoan: Gas prices in Colorado have been rising. What will reformulated gas do?
