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Varchild2008 (84.39)

Why Reformulated Gas costs more

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March 12, 2012 – Comments (13)

http://www.freerepublic.com/focus/f-news/2019642/posts

"Q. What is reformulated gas?

A. It is blended to burn cleaner by reducing smog-forming and toxic pollutants...

Q. Where is it used?

A. .......... 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. "

--------2008

But according to Motley Fool CAPS players there is no cost to Reformulatd Gas.  It is all the same!
Nonsense!!!!

That article above is obsolete...out of date.....Today's standards have gotten much much much worse since then.  

13 Comments – Post Your Own

#1) On March 12, 2012 at 5:20 PM, leohaas (92.02) wrote:

A whole dime? Is that what you are harping about? So, if gas were just $3.90 in stead of $4, everything would be hunky dory?

Reformulation is not the main determinant for gas prices. Has never been, will never be.

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#2) On March 12, 2012 at 5:28 PM, Varchild2008 (84.39) wrote:

Uhm no.   There are over 30 mixtures right now and the list keeps growing.

The article is from 2008 and it was isolated to discussing a specific type of reformulation in a specific area.

The only purpose of this is to simply show that Reformulations in this case "10%" Ethynol was the mixture, do indeed impact pump pricing.

If you actually read the whole thing it also mentions price spikes on top of that 10 cents that deal wtih switching from Winter Blend to Summer Blend.

And anyhow... There's a lot more to this story than just this 1 article.

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#3) On March 12, 2012 at 5:31 PM, Varchild2008 (84.39) wrote:

http://www.encapgroup.com/news/otherfactors.html

Read the above article from 2005 which shows that there is a SUPPLY issue with reformulations.

Create more Reformulations and you create Supply Shortage.

10 cents increase in the one article was only strictly about the cost of 1 mixture versus another.   It did not deal with other factors involved concerning Supply and Demand.

And there are TONS of areas to explore just on the Supply issues with Reformulations.

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#4) On March 12, 2012 at 5:45 PM, Varchild2008 (84.39) wrote:

"09/03/1990 Robert H. Gilman Akzo Chemicals Inc. Houston To reduce the financial impact of impending gasoline and diesel regulations, it will be necessary to reevaluate refinery unit operations in conjunction with innovative catalyst and process technology. The challenge will be to comply with these regulations without excessive retail gasoline prices. In addition, the industry will need to maintain profitability to remain competitive with other industries. Presently, industry experts predict that capital expenditure requirements for gasoline reformulation will exceed $20 billion.' Catalyst technology and operational changes will be ..."


http://www.ogj.com/articles/print/volume-88/issue-36/in-this-issue/refining/capital-outlays-for-gasoline-reformulation-can-be-minimized.html

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#5) On March 12, 2012 at 5:56 PM, Varchild2008 (84.39) wrote:

http://www.ftc.gov/speeches/other/midwestgas.shtm

Here's another article from the Government claiming Chicago area saw a jump of 22 cents a Gallon from Phase II reformulation requirements.

Read the whole thing if you are so inclined.

The whole story is better than commenting on a small piece of the story.

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#6) On March 12, 2012 at 7:48 PM, Varchild2008 (84.39) wrote:

http://www.thefreemanonline.org/featured/government-reformulated-gas-bad-in-more-ways-than-one/

Above is a September 2003 article warning people about the dangers of over-regulating fuel types...reformulations.

That article was from the President of Graduate Studies from Baker College here in Michigan.

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#7) On March 12, 2012 at 8:01 PM, Varchild2008 (84.39) wrote:

I think IKKYU2 should go back to College and learn something from Baker College about the effects of Reformulations on Gas prices at the pump.

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#8) On March 12, 2012 at 8:52 PM, HarryCarysGhost (99.78) wrote:

Hey Varchild check out UGA as a hedge to rising gas prices.

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#9) On March 12, 2012 at 9:50 PM, Varchild2008 (84.39) wrote:

Uhm no.  I'd rather invest in CHK.

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#10) On March 12, 2012 at 9:54 PM, Varchild2008 (84.39) wrote:

On second thought maybe HAL?

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#11) On March 13, 2012 at 8:00 PM, ikkyu2 (99.46) wrote:

You're on crack, Varchild - and you'd better hope I mean what a refinery does!


Reformulations like what you're talking about are a result of a number of factors.  One is regulations, mostly to mitigate environmental effects. These vary locally by a large amount. Another is the fact that especially in cold areas of the country, different times of year demand different formulas of gasoline.  Otherwise your car won't start. 

 

The drivers for reformulation aren't primarily economic in nature and therefore you can't look at them from a business-economic perspective.  The refinery companies have little ability to control what sorts of formulas they are required to deliver to gas stations.

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#12) On March 14, 2012 at 3:11 PM, Melaschasm (85.85) wrote:

At the end of the Clinton administration new rules for unlead gas formulas were passed.  The USA went from maybe 5 national formulas at least 5 times as many formulas based upon geographical location.  This change was not because the old formulas caused cars to fail to start during different times of the year or in different parts of the nation.  It was because of environmental concerns.  Primarily fears of smog or carbon dioxide emissions.

This change added significantly to gas costs.  At current prices we are probably paying an extra 50 cents per gallon because the many local requirements set by the federal government.  While paying an extra 50 cents a gallon may not break me financially, it does cause harm to the US economy as a whole.

While there may be an environmental justification to have 5 different standards depending upon the geographical location of the station selling the gas, there is no environmental justification to set 30 different standards for different parts of the country.

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#13) On March 14, 2012 at 8:38 PM, Varchild2008 (84.39) wrote:

"The drivers for reformulation aren't primarily economic in nature and therefore you can't look at them from a business-economic perspective. "

But I can and I am.  What with Gasoline prices around $4.50 a gallon in New York.

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