Nicole Burian
Mr. Reuter
Economics
21 April 2015
Gas Prices in Warmer Months
As summer rapidly approaches, many begin to plan where they want to travel. However, when gas prices increase, some people might turn away from driving as much as they originally wanted to. While driving long distances away may be an enjoyable way to spend the summer, at the same time, it could end up costing more than expected.
The price of gas generally rises with the temperature. With that said, gas prices tend to climb during the summer months. This is due to the increased demand. More people want to drive because they have more free time or they prefer the warmer weather. Due to this change in quantity demanded, the gas prices increase.
Another reason the gas prices increase is due to the different gas blends used in the summer and winter. Basically, the winter fuel needs to evaporate at lower temperatures or the car will not function properly. Similarly, the summer fuel evaporates at higher temperatures. The Clean Air Act requires this difference in gas. Different cities have different temperatures, so it is more expensive to produce the gas for each area. The temperature at which the fuel evaporates is measured by the Reid Vapor Pressure, or simply the RVP. A higher RVP equals a higher evaporation temperature. The summer gas blend uses about 1.7% more energy than the winter gas blend and does not have the same mileage, which causes it to be more expensive. Furthermore, it costs money to switch to the other fuel as the weather changes, and it also costs money to store the fuel for the opposite season, which also adds to the overall price per gallon.
It is important to evaluate the opportunity costs while considering where to travel. Even though it may be fun to drive around when the weather is warm, it will end up costing a lot of money. If the gas prices are problematic, then consider going to another place that is closer to eliminate the price issue, or wait to travel until the trip can be afforded. However, to many, gas is an inelastic good, so no matter how much the price changes, they still purchase it to drive their cars. This causes them to spend more money during the summer.
Although it can be exciting to drive long distances during the warm summer months, it is important to remember the impact that gas prices can have on one’s wallet. Before planning that long-awaited vacation, remember to carefully consider what the gas prices will look like when you want to travel before spending more than originally anticipated.
Works Cited
Gustafson, Cole. "New Energy Economics: Why Do Gas Prices Rise in Summer?" Ag News from NDSU. Ed. Rich Mattern. N.p., n.d. Web. 2015.
Rawlins, John. "Gas Prices on the Rise, but Why?" 6abc Philadelphia. ABC, n.d. Web. 2015.
Vaughan, Patty. "Gas Prices to Remain below $3 for Nation, Saving $97 Billion during 2015." Total Landscape Care. Randall-Reilly, 7 Jan. 2015. Web. 2015.
"What Is the Difference between Summer- and Winter-Blend Gasoline?" AAA NewsRoom. AAA, n.d. Web. 2015.
This was a really interesting post. I never knew that there was a rate at which gas evaporates. Overall, it does make sense that there is more driving in summer, but at the same time I think about more people that will walk/run in summer due to the fact that its warmer. I feel like it should be more used in winter until I realized that many more people road trip in the summers and that's why it is higher. Overall, it sticks that gas has to fluctuate but it makes sense due to the change in demand.
ReplyDeleteNice informative on the modus operandi of gas prices, especially as to how and why their prices change with the seasons. I didn't know that the blend of fuels was changed between seasons, or that the summer blend uses more energy and is less efficient. This is quite clever, meaning that gas companies can capitalize on the travel bug during the summer, selling more fuel that is less efficient, and still complying with legislation pertaining to emissions. Thanks for this insight on gas prices!
ReplyDeleteI never knew that there were different gas blends for winter and for summer, so I found that pretty interesting. I also didnt think that the summer months would have the most driving, I thought it would be the exact opposite. It would make more sense if less people drove in the warmer weather because they would rather walk or bike. Then the winter months when the roads are full of snow, everyone would drive to get places. But it also makes sense that people would drive greater distances to get to vacationing places.
ReplyDeleteAt first I thought it was odd that gas rices would increase during the summer months, but after reading your article, it makes sense. Oil prices wish to make a profit off of traveling families, and since most families vacation in the summer, they raise the prices. Another reason they may raise rices is because since the supply for gas is higher in the summer, they need to hire more workers, and they need money for these workers' salaries.
ReplyDeleteIt is not a new concept, but here again we see producers trying to exploit consumers for every penny that they will pay. But it is a good move on their part. They are attempting to maximize profit, and demand for gasoline in summer becomes a more inelastic curve, so then by raising prices, gas companies will raise their profits which is their ultimate desire.
ReplyDeleteGas prices always seems to be relatively high. Especially during the summer months when the demand for gas skyrockets as people travel long distance for summer getaways and more people are willing to go out and do things with the income of warmer weather. But one thing that we do not tend to look at but should is that the gas market is oligopoly with a few big companies controlling the bulk of the market. While they can't push prices up too much, with few companies, the companies may choose to collude to push prices up even further and overprice the commodity greatly. I'm not saying this is happening in the gas industry at the moment, but it is something to ponder in the future if prices continue to climb.
ReplyDeleteI had know idea the gas prices changed during the warmer months. After seeing the evaporation rate and things that go into the gas to make it able to use, but declines the mileage and costs more there's no wonder why they raise the gas prices the people need it and the only places that have it are the gas stations.
ReplyDeleteI didn't know that gas prices depended on the weather and time of year. I always just thought it had to do with where oil was in the world, and who had it. I work more in the summer than during the school year, so this shouldn't be much of a problem for me. I wonder what other things become more expensive during different times of the year to increase profit or offset production costs.
ReplyDeleteMy car is a diesel and I've noticed a somewhat opposite trend. Right now, diesel is about 20 cents more per gallon than gas. Diesel fuel prices tend to be higher in winter months, around 70 cents to a whole dollar more than gas. I found out that diesel fuel is the same thing as #2/heating oil (for furnaces or something), which is obviously in higher demand in the winter months. I don't think diesel should be more expensive than gas to begin with, since it is far less refined, but that's another story.
ReplyDeleteIt's definitely interesting that gas prices are higher in the summer, but I thought it might have something to do with the environmental impact rather than the actual formula of the gas itself. If more people are driving longer distances during the summer, the more air pollution our cars are creating, so I thought that perhaps the higher price was some incentive to not drive as much. I had no idea the fuel itself changed, creating a higher necessary price for gas companies to meet consumer needs without losing money. It's interesting to see a different side of the gas economy instead of just general reasons for pricing. Very interesting article!
ReplyDeleteI actually didn't know there was different blends based on the season and temperature and it's interesting in how it costs more to produce the gas for each area. Gas is a much talked about topic, but this was a different take and aspect of it which was very interesting to read about. I also thought that it was weird that gas in more expensive in summer but is it because more gas is used during that time due to more free time because kids are off school?
ReplyDeleteWhen the gas prices were under the usual prices in the winter, I was shocked because one of my relatives said the same thing. During the winter everyone just stays inside trying to get away from the cold. Whereas, in the Summer everyone is out and about on road trips, airplanes, etc. I agree that gas is an inelastic good.
ReplyDeleteWhile I was a little taken back to my own naivety to the change in gas prices due to climate increases, the more I thought about it the more it made sense. Just like there is seasonal employment shops and malls, in which during times of high business e.i holidays, there are also times of in which the demand increases to the point that gas could become more profitable. That being said, as long as each company manages their own prices without correlating a major spike with all other gas stations, it's all part of the economic game of consumerism.
ReplyDeleteThe topic you choose was very interesting to read about. I never recognized the trend in gas prices. Looking at companies viewpoint is very smart to raise the gas prices in the summer, because like you said people have more time to travel. Kids for example don’t have school, they are out with friends almost everyday and I know that kids in suburb have to drive almost everywhere. Gas in an inelastic item that drivers can not go without. Also, I never knew that there were seasonal fuel blends. Maybe that’s why in the south the gas prices are lower than ours in winter because they have a more ideal temperature.
ReplyDeleteIt was a really cool topic and good because it relates to most people. It would be a very smart idea to raise the gas prices during the summer months due to traveling and everyone being home more. Gas is indeed an inelastic item because most people aren't going to change their ways of transportation just to no pay for gas.
ReplyDeleteIt was a really cool topic and good because it relates to most people. It would be a very smart idea to raise the gas prices during the summer months due to traveling and everyone being home more. Gas is indeed an inelastic item because most people aren't going to change their ways of transportation just to no pay for gas.
ReplyDeleteYou brought up a number of good points in your post, and a few I had never even thought about before. For example, I did not know that there were different gases basically for the summer versus the winter months, which makes sense as to why they have different costs. Makes me wonder how much money someone could make if they developed a hybrid gasoline that does not have to worry about the temperature being too high or too low. It was also interesting how you brought up the fact that it is by law that we have these different gases and therefore different prices of gas over the summer. It also makes sense that petroleum companies raise money during the summer months because people are more willing to drive places. Although, I'm not sure if I agree with you when you say that people have more free time. More people become seasonally employed in the summer months and usually firms experience an increase in production or output, causing people to have to work more during the summer. All in all though you brought up a number of good points in how gas prices affect the economy.
ReplyDelete