Summer '14: Gas not likely to hit $4 per gallon
CHAMPAIGN — Gas prices in the Champaign-Urbana area are less likely to break $4 a gallon this summer than they were in recent summers, a petroleum industry analyst said.
That may seem like a pretty bold prediction from Patrick DeHaan, given that prices in the Champaign-Urbana area last week were hovering in the $3.89-a-gallon range.
But DeHaan, a senior petroleum analyst for GasBuddy.com, said the average price of gasoline this summer is likely to be 3 to 7 cents lower per gallon than last summer.
“By and large, I think motorists won’t feel a whole lot of difference,” said DeHaan, whose organization monitors gas prices across the nation.
Last year, Champaign motorists paid an average of $4.19 a gallon for gas for a brief time in early June. Gas prices also topped the $4 mark in the springs of 2011 and 2012. But all three of those peaks were followed by sharp price declines.
“This is the first summer since 2010 that gas prices are likely to stay under $4 a gallon,” he added.
The big difference from previous summers, DeHaan said, is that the largest oil refinery in the Great Lakes region — the BP refinery in Whiting, Ind. — has completed an eight-year modernization project.
“For the first spring and summer in eight years, that facility is online,” he said, adding that the refinery provides gasoline not only for BP stations, but for other brands as well.
Another large refinery — the Phillips 66 refinery in Wood River — also has no planned maintenance outages, he said.
A second factor keeping prices in check is the availability of Canadian oil-sands crude, which sold for as little as $85 a barrel recently.
Plus, DeHaan said, with U.S. oil production up, particularly in North Dakota, the nation is less reliant on imports.
“Without Canadian oil sands and North Dakota crude, we would see prices $15 to $30 a barrel higher, and that would play out in what we pay at the pump,” DeHaan said.
In April, the Energy Information Administration, part of the U.S. Department of Energy, projected an average retail gas price of $3.68 a gallon in the April-May-June quarter, followed by a $3.55 average in the July-August-September quarter.
In its Short-Term Energy Outlook report, the agency forecast a $3.57 average price for this summer, down from a $3.58 average in summer 2013. In the Midwest, the average price this summer was expected to be $3.55, a couple pennies lower than the national average.
In nine of the last 14 years, gas prices have dropped between Memorial Day and the Fourth of July, and some of those have been pretty steep declines, DeHaan said. Last year, prices fell by nearly 40 cents a gallon, and in 2012, there was a 31-cent drop.
Prices are more likely to be volatile in the late summer due to hurricane season, he said. Much of the nation’s new refining capacity lies between Corpus Christi, Texas, and Pascagoula, Miss., so hurricanes could affect not only oil production in the Gulf of Mexico, but also refinery operations along the Gulf Coast.
Though the hurricane season can extend from June 1 to Nov. 30, the most common occurrences come between mid- to late July and mid- to late September, DeHaan said.