Skip to comments.Here's Why Area [Gas] Prices Are Higher (Reformulated Gasoline)
Posted on 05/22/2008 5:52:13 AM PDT by Diana in Wisconsin
At an average price of $3.96, gasoline prices are up nearly 50 cents a gallon from this time last year, and gas is more expensive in Milwaukee than the national average and the rest of the state.
Though the biggest reason for rising gas prices is the skyrocketing price of crude oil, prices also are higher in Milwaukee because of the region's polluted air.
The six counties in southeastern Wisconsin are required to sell a blend of fuel known as reformulated gas that emits fewer pollutants that contribute to smog and poor air quality than regular gasoline.
The U.S. Environmental Protection Agency announced this week that southeastern Wisconsin will remain in violation of ozone pollution standards, because an air pollution monitor in Kenosha County near the Illinois line was out of compliance between 2005 and 2007. That means all of southeastern Wisconsin remains out of compliance.
Gasoline prices aren't always more expensive in the Milwaukee area than in the rest of the state, said Pam Moen, spokeswoman for AAA Wisconsin. That's the case this year, though, heading into Memorial Day.
As of Wednesday, the price of regular unleaded stood about 15 cents higher in the Milwaukee metro area than in the state's five other markets surveyed by AAA for its Web site www.fuelgaugereport.com.
Here are some answers about rising gas prices and why gas in Milwaukee is costing more:
Q. Why are gas prices so high overall?
A. There are four main ingredients in the price of gas: crude oil prices, the refinery process, distribution and marketing, and taxes. Crude oil today accounts for about 73% of the cost of a gallon of gas, according to the U.S. Department of Energy, up sharply because of the run-up in crude oil prices.
Q. So what's driven up the price of oil?
A. Any number of factors, which some analysts attribute to fear about future oil supplies, others pin to the falling value of the U.S. dollar, and still others noting increasing moves by investors trying to profit. Oil prices have doubled in the past year, reaching more than $133 a barrel Wednesday.
Prices have escalated as supplies from OPEC countries have remained flat, supplies from non-OPEC nations have fallen, and demand continues to grow, led by the rapidly industrializing economies in China and India.
Q. What is reformulated gas?
A. It is blended to burn cleaner by reducing smog-forming and toxic pollutants. In Wisconsin, gas is blended with 10% ethanol to reduce emissions.
Q. Where is it used?
A. Reformulated gas isn't used everywhere. Because of pollution problems, it is used in the Northeast, California, Texas, St. Louis and Chicago, northwestern Indiana and the six-county region of southeastern Wisconsin.
Q. Why does it cost more?
A. Refineries have to blend it specially. When oil supplies are tight and refining capacity is high, prices for reformulated gas can rise faster than gas prices in general.
Q. Is reformulated gas always more expensive?
A. Usually. Across the Midwest, reformulated gas has been more expensive than conventional gas in all but three weeks over the past year, federal Energy Department data shows. On average, it costs a driver in areas such as Chicago, St. Louis or Milwaukee an extra 8 cents a gallon to buy regular unleaded compared with someone living in a non-reformulated-gas area. Since the end of March, it has cost at least a dime more to buy reformulated gas.
Q. Why does it go up in the spring?
A. By June 1, all gas stations in the six-county area must be selling the less-polluting "summer" blend of reformulated gas, which they must continue selling until Sept. 15. Price spikes often occur during the transition period from "winter" to "summer" blends of gasoline.
Q. How do taxes play a role in gas prices?
A. Wisconsin adds a tax of 30.9 cents to every gallon of fuel. In addition, there is a 2-cent-per-gallon underground storage tank fee assessed by the state. Combined with the federal gas tax of 18.4 cents, Wisconsin motorists pay 51.3 cents per gallon in taxes, about 4 cents higher than the national average.
Most other states tax gasoline at a much lower rate, such as Alaska, which assesses only 8 cents per gallon on top of the federal tax. According to the American Petroleum Institute, the tax paid by Wisconsin residents is the seventh-highest in the nation after California, New York, Illinois, Michigan Washington and Florida.
Q. But it's cheaper here than other places, right?
A. Yes, Chicago's prices are higher. Chicago stations must sell reformulated gas, too, and Illinois' gas tax is higher than Wisconsin's.
Q. If southeastern Wisconsin one day complies with ozone standards, will the region still have to use reformulated gas?
A. Yes. States with ozone troubles must continue to take steps to keep air clean. In Wisconsin, the DNR says this means the region must continue to use reformulated gas and operate the vehicle inspection program.
Q. What concerns have been raised about using an ethanol blend in reformulated gas?
A. Most of the controversy about ethanol stems from the E85 blend - 85% ethanol -which can reduce a car's fuel economy. But use of 10% ethanol causes "no perceptible effect on fuel economy," the U.S. Energy Department says. Widespread use of the E10 blend of ethanol across the state could result in higher emissions of certain pollutants, the DNR said in a report several years ago, but cars fueled with ethanol blends emit fewer greenhouse gases than those running on 100% gasoline.
About 1/4 of the rise is due to the falling dollar.
Why do they ignore the cost of ethanol, the "gift that keeps on giving?"
It bites us from both ends, resulting in higher food prices, higher taxes for the handouts to farmers that make it economically viable, AND the REDUCED FUEL MILEAGE that results from the use of a lower-energy-content additive (ethanol) in our gasoline!
One of the dirty little secrets is that the EPA air monitors have been purposely set up in areas that register higher amounts of ozone particles. These monitors in no way measure representative samples of the air in this area. In fact, it wouldn’t surprise me to learn that the EPA simply makes up numbers. The EPA is the most corrupt federal agency in America.
It’s a matter I meant to alert Charlie Sykes, a Milwaukee radio personilty, about but never did so.
Agreed. Living in a Ag State, I can assure you that there are literally thousands of farming families lining up for this government-created boondoggle. My family is one of them. Dad usually plants both corn and soybean; this year it’s 240 acres of corn, only.
Gotta make hay while the sun shines, right? It’s hard to walk away from that $6 bucks per bushel price that we’ve never seen before in our lifetimes. ;)
“The EPA is the most corrupt federal agency in America.”
Our local Conserva-Babe talk radio host thrashes the EPA on a regular basis. She’s brought this situation to light in our area. Wisconsin is always being penalized due to the smog floating up from ChicagoLand.
http://www.wiba.com (Vicky McKenna)
RFG is news FIFTEEN YEARS after the dims forced it upon us??
And the falling dollars is due in a large part -- a very large part -- to the fact that not only are we probably the only industrialized nation not striving towards energy independence/upgrade but, thanks to the domestic "powers that be" we're even permitted to try.
Lets not forget that this whole thing is the blame of Jimmy Carter and his communistic land grabs wich render drilling impossible, and seconded by the greenies.
That is only part of the reason fuel prices are high. WI Freepers are encouraged to go to my website http://www.theusmat.com/ which explains the other reasons including the planned for refinery, in Superior, and what diversions Obey and Kagen offer.
On top of that, Wisconsin doesn’t allow “gas price wars”.
That’s right...if for some reason, you want to sell gas 10 cents a gallon cheaper than the guy across the street....you probably can’t, because of the “Unfair Sales Act” or (Minimum markup law)
Motor vehicle fuel may not be sold at less than cost. For businesses selling motor vehicle fuel at a retail station, cost includes a 9.18% markup over the average posted terminal price. For wholesale transactions, cost includes a presumptive 3% markup.
Back in 2007, a judge ruled the law unsconsitutional...I don’t know where it stands today.
did Murphy oil shut down the refinery in superior??
I heard that they did. That info about the blocked refinery came from Charlie Sykes WTMJ am 620. From what I understand most of the ashphalt we use in the state came from there and Murphy wanted to up grade to refine Canadian fuels. But I will check on that.
It was still operated by Murphy Oil as of January 1st this year.
Thanx will seek facts