Matt Lichtenberger wades out into the still partially frozen Lake Michigan Friday to look for valuables with a metal detector in Chicago. A winter of record low temperatures has kept ethanol from reaching the East Coast, which could drive gas prices up. (Reuters)
ALBANY — Old man winter may be making a last early spring stab at Southwest Georgia tonight when temperatures are expected to be near freezing, but he may also have some lingering effects at the gas pump.
That’s because cold, snowy weather in the Midwest has prevented trains from delivering enough ethanol to the East, including the Southeast. Officials with AAA The Auto Club Group say compensating for the lack of ethanol, which makes up about 10 percent of a gallon of gas at most outlets, could drive up the price at the pump this month.
AAA officials said the Oil Price Information Service is reporting that to prevent gas outages, producers are blending premium grade, usually 93 octane in the South, with sub-87-octane gas to create 87-octane grade, or regular grade, fuel.
“When there is no ethanol blend in the gasoline, you could see the price of gas increase,” AAA spokesman Mark Jenkins said. “That is because a higher-costing product, premium gasoline, is being used to increase the octane level.”
According to the Energy Information Administration, the East Coast Petroleum Administration for Defense District, which in the South includes Georgia, Florida and the Carolinas among its 17-state region, had 4.48 million barrels of ethanol on March 14, compared to 6.43 million barrels for the second week of March 2013. The problem has been the harsh winter in the Midwest, the coldest in 30 years. It has interrupted rail traffic in Chicago and other trade hubs by stalling locomotives, freezing track switches and making it difficult for crews to get to work.
On Monday morning, the AAA’s Daily Fuel Gauge Report, the average price of a gallon of regular-grade gas nationally, was $3.529, up eight-tenths of a cent from St. Patrick’s Day and a 13.5-cent jump from last month. Still, the average is a little more than 14 cents per gallon below the $3.671 national average for the same date last year.
Georgia motorists, meanwhile, saw a 3.6-cent increase week-to-week to Monday’s average of $3.373, which was nearly a dime higher than Feb. 24’s average of $3.277. Year to year, Georgia motorists Monday were saving 15.8 cents per gallon.
Albany had the lowest average price of Georgia’s eight metro areas Monday morning, with AAA reporting the cost at $3.295. It was the only metro area with an average below $3.30 per gallon. That, however, was 4.7 cents higher than on St. Patrick’s Day and a 7.3-cent increase month to month. Compared to the same time last year, Albany motorists were paying 17.9 cents less a gallon.
AAA officials said motorists can expect prices to continue to creep up as March draws to a close. How much depends on factors such as political tension in Ukraine and maintenance of U.S. refineries as they shift from winter to summer blends.
“AAA expects the national average to peak in late March or early April between $3.55 and $3.75 per gallon,” Jenkins said. “The increase is based on seasonal refinery maintenance and the approaching switchover to producing summer-blend gasoline that is required by May 1.”
So far, the gas price increase this month has been below recent averages. In two of the past three years, pump prices jumped about 20 cents during the month of March. AAA officials don’t think the highs will match last year’s.
U.S. crude oil ended Monday at $99.6 per barrel, up 14 cents.
Concern about a disruption or reduction of the international oil supply because of the Russian annexation of Ukraine’s Crimea region has lessened in recent days, and China’s manufacturing activity shrank in March. With that weak demand, Brent crude for May fell 11 cents to settle at $106.71 a barrel Monday.
While the United States and the European Union have threatened to ratchet up sanctions against Russia for its aggression, so far that has not resulted in cutting the use of Russian oil. Russia is a major supplier of gas and oil to Europe.
GasBuddy.com’s senior petroleum analyst, Patrick DeHaan, said the slowdown in pump increases was no surprise.
“As I expected, the panic at the pump slowed considerably in the last week, with the national average barely grinding out an increase in the last week,” DeHaan said Monday. “A cooling in oil prices during the previous week heavily influenced last week’s quieter increase.”
Whether that will continue was undetermined Monday. Russia continued its incursion into Crimea, and civil unrest in Libya was expected to bring that country’s exports to a halt today.
As for domestic production, reports Monday said that major Texas shipping channels for the delivery of crude oil to more than 10 percent of the nation’s refining capacity were shut for a third day as the cleanup from a spill threatened to last through the week.
DeHann said refinery issues could be a pump price wild card.
“While oil prices haven’t moved much higher, we are starting to see more chatter about refinery incidents as more of them finish maintenance and get back online, and this can lead to spikes in gasoline prices if several refineries see unexpected outages or longer-than-normal return to production times, so motorists should be vigilant that while I don’t expect prices across the nation to spike significantly, it’s a risk that’s on the table, ” DeHaan said.
GasBuddy daily surveys 5,883 retail gas outlets in Georgia. Its survey found that the average in Georgia rose 2.3 cents per gallon week to week at $3.36 per gallon, below the national average of $3.51 that did not move from last week.
Including the change in gas prices in Georgia during the past week, GasBuddy said prices Sunday were 14.2 cents per gallon lower than the same day one year ago and were 7.9 cents per gallon higher than a month ago. The national average increased 10.2 cents per gallon during the last month and stood at 13 cents per gallon lower than the same day a year ago.
According to the AAA Fuel Gauge Report, the average pump price for Georgia metro areas after Albany on Monday were, in ascending order: Augusta, $3.306; Macon, $3.319; Columbus, $3.329; Athens, $3.357; Savannah and Valdosta, tied at $3.377, and Atlanta, $3.401.
Reuters News Service contributed to this report.