MASON CITY — The price of crude oil has dropped about $15 since the middle of last week, but North Iowans may have noticed gas prices at the pump aren’t following as quickly, due to healthy demand.
Gas prices for midgrade with 10 percent ethanol were around $3.77 a gallons in Mason City on Friday, according to gasbuddy.com.
Statewide midgrade gas prices averaged $3.89 a gallon on Friday compared to $3.86 a week ago, according to AAA.
Crude oil was $115 a barrel mid-last week and just below $100 Friday, said Gail Weinholzer, director of public affairs for AAA Iowa/Minnesota. Typically gas prices go up or down 2.5 cents for every $1 change in the price of oil.
However, gas prices haven’t been following that model for a reason.
“Since we fill up with gasoline people should look at gas futures instead of crude oil prices,” said Patrick DeHaan, senior petroleum analyst for gasbuddy.com. “Refineries sometimes don’t produce enough gasoline.”
“That’s what we’ve been dealing with lately,” he said. “Refineries are simply not producing enough and demand is remaining healthy.
“The most significant reason is the flooding in the Gulf Coast area,” Weinholzer said. “Thirteen percent of U.S. oil refineries’ capacity has had to shut down temporarily during the flooding in the Gulf Coast, Mississippi and Alabama region.”
DeHaan said oil refineries also may not be producing as much gasoline because they’re currently switching over to the summer blend.
“They’re slowing building inventory,” he said. “That’s why supply has been tight.”
While gas prices haven’t been responding to lower crude oil prices, both DeHaan and Weinholzer expect they will soon.
“I would expect prices will begin to drop in the next week or two,” DeHaan said.
He said supply should be up by then, and Weinholzer said the Gulf Coast flooding should decline.
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