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Here’s why gas prices in Tucson and across Arizona remain high

Gasoline prices have been falling across the country in recent weeks, but they’re barely falling in Arizona, where a full tank of gas costs more than $1 a gallon more than the national average.

Industry analysts say a combination of factors, including the transition to blended gas each summer, tight pipeline capacity and refinery shutdowns, have all contributed to the recent spike in gasoline prices in Arizona. ing.

The average price of unleaded regular gasoline across Arizona was $4.68 a gallon on Friday, down about 2 cents over the week but still up about 18 cents from the previous month. AAA data.

Gas prices averaged $4.68 a gallon on Fridays in Tucson as well, but until recently Old Pueblo prices were generally lower than the state average.

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By contrast, the national average gas price of $3.54 a gallon on Friday was about 2 cents lower in the week and about 8 cents lower than a month ago.

Gasoline prices across Arizona are now several cents lower than they were a year ago, when gasoline prices were soaring in the wake of Russia’s invasion of Ukraine.

Nationwide, the recent fall in crude oil prices, which accounts for about 60% of the retail price of gasoline, has contributed to lower prices.

But beyond oil prices, local factors such as fuel supply chains and demand play a large role in how much drivers pay to pump.

capacity crimp

A combination of some long-term factors and some short-term factors has driven gasoline prices higher in Arizona recently than in the rest of the country, said Patrick De Haan, head of oil analysis for online gasoline price tracking site. said it had stopped. gas buddy.

First, there are two major fuel pipelines that serve Arizona: one western pipeline connecting refineries in California to Phoenix and Tucson, and one carrying product from refineries in New Mexico and Texas. East side pipeline) is reaching the limit of its production capacity due to the increase in demand caused by the rapid population growth. De Haan said:

“We don’t have enough pipeline capacity to supply a lot of people with gasoline, especially in Phoenix, because pipelines aren’t keeping up with population growth,” he said.

Maricopa County will have the highest population growth in the nation in 2022, according to U.S. Census Bureau data, adding nearly 57,000 residents as of July 1, an increase of 1.3%. Pima County will add about 12,600 residents in 2022, an increase of about 1.2%.

Supply disruptions, such as refinery shutdowns, will only exacerbate the problem by straining pipeline capacity.

refinery repair

Part of the problem is that two refineries that currently supply Arizona from the East shut down simultaneously for maintenance, further straining supplies.

The refinery operates 24 hours a day, seven days a week, except when it is shut down for maintenance. Arizona has no operating oil refineries.

AAA Arizona spokeswoman Julian Paredes said maintenance shutdowns at refineries in El Paso, Texas, and Artesia, New Mexico, were the main drivers of the high gas prices in Arizona.

“While this has affected gas supplies across the state, especially in the Pima County area, state averages are at least stable and not on an upward trend so far,” Paredes said.

Refinery shutdowns in California were blamed for a spike in gasoline prices in Arizona last fall, forcing some stations to sell off cheap fuel and others to raise prices, pushing prices down across Tucson. A big gap arose.

DeHaan said refineries across the country typically shut down for maintenance in the spring, but the outage at the eastern refinery was due to limited supply from California.

“Most refineries are doing maintenance ahead of the start of the summer operating season to see if they are ready for the summer,” he said. “The problem is that we can’t ship more product out of the west because we don’t have enough refineries in the east.”

De Haan said the problem was exacerbated last year by many refineries postponing maintenance due to lack of pipeline capacity, with this year’s maintenance work being more extensive. It says.

“A lot of people postponed last year’s maintenance to this year, but here’s the price,” he said. “There’s not much you can do about it. Just grin and bear the price.”

A combination of factors has made gas prices in Tucson and throughout Arizona higher than in the rest of the country.

Kelly Presnell

The dilemma of blending

To make matters worse, DeHaan said, Arizona and California have moved to a blend of summer gasoline and ethanol, which is required under environmental laws to reduce air pollution, especially in Maricopa County. He said there was a supply problem because of the

During the winter months, gas retailers in designated areas, including Maricopa and parts of Pinal and Yavapai counties, are required to sell special “cleaner-burning gasoline” or CBG blends as specified by the State Department of Environmental Quality.

Tucson and the rest of the state are not subject to these requirements, so non-CBG may be sold there.

During the summer from the end of May to the end of September, the Maricopa County area will be given another mandatory CBG blend, while another designated area comprising parts of Pinal County, including Casa Grande, will have its own blend required by the state. is given.

California, meanwhile, is switching to a completely different blend, which is affecting local markets, De Haan said.

De Haan explained that the transition usually begins in March as pipeline operators are venting winter gas out of pipelines as temperatures rise and pipelines can only carry one formulation at a time. bottom.

“As the transition begins, it’s complicated to have several different requirements in place across the state,” De Haan said, noting that the switch to different formulations is usually done in phases.

“However, a lack of pipeline capacity from the West, shutdown of refineries supplying markets from the East, and fragmented rules about the type of gasoline (required) could create an explosive environment. It’s exactly what we’ve seen all over Arizona,” De Haan said.

feel some relief

Mr de Haan said motorists will get some peace of mind in the short term as refineries resume production.

“The transition to summer gasoline is fundamentally delayed, which simplifies the situation and that’s why prices are starting to ease a bit,” he said. “Oil prices have fallen somewhat, so there are other factors that have helped tip the balance, and now we are starting to see a slight improvement in prices.”

AAA’s Paredes said the price disruption could be short-lived.

“Once refineries in Texas and New Mexico resume operations soon and normal supply lines are restored, we can expect gas prices in Arizona to be more in line with the national average,” Paredes said. . “But this is right before the Memorial Day trip, which is when gas prices go up anyway.”

looking to the future

DeHaan said Arizona could face similar supply problems next spring, but it was somewhat unusual for two major refineries in the same region to shut down for maintenance at the same time.

“There is still material left for the same issue next year, so it’s possible that this problem will come up again in the spring,” he said.

Meanwhile, a long-term solution to Arizona’s fuel supply capacity problem may be under consideration.

kinder morganThe company, which operates fuel pipelines that serve Arizona, is considering a major expansion of its pipeline from El Paso to Tucson to increase production capacity, DeHaan said.

In April, the Houston-based pipeline company began soliciting comments and commitments from fuel carriers backing the proposed expansion, saying it will scale up according to demand.

DeHaan said policymakers could also ease the supply situation by standardizing CBG requirements.

Currently, the U.S. Environmental Protection Agency sets and enforces clean gas standards, with the exception of 12 states, including California and Arizona, which have stricter regulations than federal regulations.

De Haan said policymakers could save consumers money by standardizing clean-burning gas formulations nationally, or at least between states that share supply pipelines, such as California and Arizona. He said he could contribute.

“This will save drivers all over the country. If there is one standard, it can be used interchangeably regardless of where it is produced or shipped,” he said. “Even in Arizona, the fragmentation of gasoline types is the dumbest idea we could ever think of. do not understand at all.”

“When the pipeline is full of capacity, nobody notices it because the system is working, but when something breaks, suddenly you realize the complexity of the system that was built.” De Haan said.

Gas prices remain high across Tucson and Arizona, so small steps can add up to big savings on your fuel bills.

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