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Economy & Business
Thu May 23, 2013
Lower Gas Prices Headed Toward Wisconsin
Gas prices in Wisconsin have been flirting with four-dollars-a-gallon, and those have been some of the highest prices in the country. However, the pain may soon begin easing. During the next few weeks, gas prices here could drop by double digits.
Until now, blame the refineries. They send 2.8 billion gallons of gas and diesel to Wisconsin every year. Yet every spring – before driving reaches its peak, they partially close for routine maintenance.
“They’re mechanical facilities, and to you have to maintain them like your car, because bad things can happen otherwise," says Erin Roth, executive director of the Wisconsin Petroleum Council, a trade association.
Roth says this year, two of those refineries are undergoing major overhauls, so the supply of fuel entering Wisconsin has been tight. And when the line is choked – or some retailers bring in fuel from farther-away, prices rise.
Roth says other factors play into the mix, but not to as great a degree. For example, crude oil has been more expensive, so has ethanol. Plus, he says the whole U.S. fuel infrastructure is more concentrated than it used to be.
“Thirty years ago, we had 340 some refineries in the country, today we have about 140 because of the Clean Air Act, EPA regulations, the non-profitability of some refineries - they went out of business. So although we have increased the capacity at refineries to make it up, there is less flexibility in the present system, when we have these occurrences,” Roth says.
If it’s any consolation, Minnesota has faced an even tighter pipeline – and gas prices averaging $4.25 a gallon.
The good news, according to Roth, is that the problem should soon alleviate itself. He predicts fuel prices here will fall 15 cents per gallon in coming weeks, as refineries come back on line.
Pam Moen, spokeswoman for the Wisconsin AAA agrees, the worst is behind us. Yet even as prices dip, she expects plenty of travelers this coming Memorial Day weekend to scale-back their plans. At least that’s how a lot responded to a survey the firm took last month, and at the time, gas prices were 30 cents lower than now.
“They may not travel as far or they may not stay quite as long or they’ll not eat out as much and look for other ways to save money, when it’s costing them so much more to get to their destination,” Moen says.
Moen says most people consider gas prices between $3.44 and $4.00 a gallon the breaking point – at which they adjust their travel plans.