As noted in last post, gas prices always spike seem to spike in the spring. Why is that?

Well, there are several reasons. The first are the basic laws of supply and demand. With nicer weather, people tend to drive more, increasing the demand and thus the price.

The second is what is called the Seasonal Gas Transition. Taking effect in 1995, amendments to the Clean Air Act of 1990 mandated a different formulation of gasoline for the summer months, colloquially known as the ‘summer blend’ to cut down on pollution. Changing output from summer to winter blends of fuel is not as easy as flipping a switch. Rather, the refinery must often shut down completely in order make the change over.

In addition, the summer blend mandates a lower percentage of Butane in gasoline for environmental reasons. The Butane is replace with more expensive ingredients, further boosting the price.

The summer blend also reduces the mileage per gallon, further increasing demand on gas to travel the same distance.

Perhaps most troubling is that different areas have different blend requirements, meaning that surplus fuel in one area can not be easily shipped to a deficit area, resulting in potential large regional price differences and giving oil companies distorted market power than they otherwise would have. This could be easily solved by doing away with these variations entirely or at the very least parring them down to a more reasonable number.

The actual cost of the summer blend is difficult to calculate and as a result, there are a wide range of opinions as to the exact cost. Estimates range from $.01 to $.15 per gallon.

As reported by WMUR this morning, gas prices have slightly increased over the past week, after a slight dip.

Looking at data from GasBuddy.com we see some interesting historical trends when it comes to March gas prices.

March historically sees a plateauing in gas prices, followed by a spike that peaks roughly around Memorial Day. The extent of the peaks vary from year to year, over the past 6 years as historical data, with anomalous years removed, NH typically sees a 17% jump in prices.

That being said, there is only so much room for prices to go up. Last year we saw only a 13% run up from a price level of about $3.50/gal, where prices rose right up against the $4/gal mark. This year we are starting at a base of roughly $3.65/gal, and a 13% increase would mean about $4.11/gal.

Conventional wisdom holds that $4.00/gal is the psychological point in which people begin to change their driving habits and most industry experts contend that the oil companies, faced with the loss of sales, will try to keep it under $4.00 a gallon. However there is only so much wiggle room before they would have to sell gas at a loss to keep it at or below $4.00/gal.

On a side note, if you haven’t discovered Gasbuddy.com yet, it is certainly worth a look. Beyond historical data, their primary purpose is to provide real time gas prices. Using something akin to a Wikipedia model, gas prices are updated by users punching in data from their local gas stations. Though these days gas prices can change several times a day, the time of the last update is noted which gives the reader an idea of how the accurate that figure is at that particular moment in time. For example, if the last update is 2 hours old, chances are it is right on the mark, if it is 18 hours old, maybe not. Data older than 36 hours is removed from the list.

It is a great tool if you are looking for the best price on gas whether it be around town, somewhere along your commute or on a trip.

Long story short, gas prices are only going to go up (baring some unforeseen event), so fill up now.

-Josh

While originally on the deferred project list for the New Hampshire Ten Year Highway Plan, the I-93 widening projects for Exits 2 and 3 are back in the plan.

The House Public Works Committee placed the projects back into the plan based on events in Washington concerning the Federal Highway Bill. When the Governor’s proposal was being put together, the conventional wisdom coming from Washington was that there would probably be a 33% cut to Federal Highway money given to the states. The New Hampshire Department of Transportation, rather than using optimistic numbers, appropriately decided to use a conservative estimate in their planning.

While this initially left the Exits 2 and 3 off the 10 Year Plan, they were placed at the top of the deferred list, meaning that in the event of more funding, they would be returned first to the Plan.

With the US House plan that sought cuts not moving forward and a US Senate Plan that provided a two year extension at current levels of Federal funding for the states heading for a vote, the NH Public Works Committee amended the 10 Year Plan and added the Exits 2 and 3 projects back. However, the amendment added the caveat that should Federal Funding not be the same as last year, then the Exit 2 and 3 projects would be removed.

The US Senate version of the Federal Highway Bill passed the body today and it is uncertain which direction US House leadership will take on the bill. Current authorization to tax runs out on March 31st, so both bodies must agree to a plan by then.

Luckily here in New Hampshire, the State Senate does not have to vote on a 10 Year Plan until after the Federal Highway Bill has passed, so they will be able to work with concrete Federal Funding figures, rather than projections.

Four hundred forty million dollars will consume, for a decade or more, practically every bit of highway money in the state of New Hampshire. Dozens of other projects, equally needed to accommodate growth and enhance safety, will be pushed aside. Most disturbing, a widened I-93 will bring rapid growth to 50 or 60 communities in southern and central New Hampshire, but the $440 million price tag will preclude or delay dozens of local highway improvements needed to accommodate the growth. The result, once you leave the interstate, will be more congestion, more delays, and less safety. If widening I-93 is necessary but dumb as proposed, is there a better alternative?