The Oil Drum: Australia/New Zealand

Every year in late summer, you will start hearing references in the media about the conversion to winter gasoline, such as the following (originally in the Bradenton Herald, but the link is long dead):

Motorists can thank a mild hurricane season in the Atlantic for the lower gas prices, according to the American Automobile Association.

Other factors include the end of the summer driving season and a cheaper winter fuel mix.

Gas stations sell a special, more expensive fuel blend during the summer to cut down on smog during hot months. Stations nationwide will start selling a less-expensive winter fuel blend Friday, which could lead to even lower prices, analysts said.

So what does this mean, and why does it make winter gasoline less expensive?

NB: This is a reposting of an article written by Robert two years ago on how winter gasoline differs from summer gasoline, and why this tends to make winter gasoline less expensive than summer gasoline. We also now have a lot of reports of gasoline outages due to short supply following Hurricanes Gustav and Ike. Feel free to discuss those in this thread or scroll down to the refinery/pipeline/gas shortages thread.

One of the things I really like about The Oil Drum is that I learn something new here almost every day. So, I thought I would return the favor by explaining in a bit more detail something you may not know.

Every year in late summer, you will start hearing references in the media about the conversion to winter gasoline, such as the following (originally in the Bradenton Herald, but the link is long dead):

Motorists can thank a mild hurricane season in the Atlantic for the lower gas prices, according to the American Automobile Association.

Other factors include the end of the summer driving season and a cheaper winter fuel mix.

Gas stations sell a special, more expensive fuel blend during the summer to cut down on smog during hot months. Stations nationwide will start selling a less-expensive winter fuel blend Friday, which could lead to even lower prices, analysts said.

So what does this mean, and why does it make winter gasoline less expensive?

One of the things I really like about The Oil Drum is that I learn something new here almost every day. So, I thought I would return the favor by explaining in a bit more detail something you may not know.

Every year in late summer, you will start hearing references in the media about the conversion to winter gasoline, such as the following (originally in the Bradenton Herald, but the link is long dead):

Motorists can thank a mild hurricane season in the Atlantic for the lower gas prices, according to the American Automobile Association.

Other factors include the end of the summer driving season and a cheaper winter fuel mix.

Gas stations sell a special, more expensive fuel blend during the summer to cut down on smog during hot months. Stations nationwide will start selling a less-expensive winter fuel blend Friday, which could lead to even lower prices, analysts said.

So what does this mean, and why does it make winter gasoline less expensive?

It was not really all that long ago when the major concern at this site revolved around whether the world would weather the tight relationship between supply of oil and the anticipated demand that would exist at the end of this year.

At the time the beginnings of demand destruction were beginning to appear with the reduction in subsidies and other government programs in some of the poorer nations around the world.   Ianqui has just reminded us of the problems that India is going to increasingly have to face.  The impact of the hurricanes Katrina and Rita brought the debate closer to home.  Current EIA predictions are that it will take until the end of this year to bring back the lost production that we have seen in the Gulf.  And yet, as I was quizzed again this morning, gas prices continue to remain lower than they should be. The answer, in part, lies at the EIA gasoline page

Just over a week ago I posted the changing picture of the American gasoline stocks.  Here is the latest version thereof, and the picture has changed in direction.
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If one  further looks at the numbers that the EIA site provides. There is a slight discrepancy between the tabulated data and that plotted, and it took me a minute to realize that the curves are showing the rolling four-week averaged data, rather than the actual weekly for the imported gasoline data (and presumably also for the rest).  This is of significance since such an average, in this case with the changing situation, initially masks the fact that the imports for the past three weeks have gone from 0.938 to 1.207 to 1.423 mbd.  One may assume (at least I am) that about 500,000 bd of this is coming from the 20 mbd of gasoline that was put up by the IEA partners in response to our request following Katrina.  If this is the level of support that can be anticipated, then it will last some 40 odd days before that source is gone.