BusinessMay 9, 2022
With continued gas price volatility in uncertain economic times, the Southeast Missourian recently asked questions of Patrick De Haan, chief petroleum analyst for GasBuddy, a Boston-based technology company operating apps and websites finding real-time fuel prices at more than 140,000 service stations in the U.S., Canada and Australia...
chief petroleum analyst, GasBuddy.com
chief petroleum analyst, GasBuddy.comPatrick De Haan,

With continued gas price volatility in uncertain economic times, the Southeast Missourian recently asked questions of Patrick De Haan, chief petroleum analyst for GasBuddy, a Boston-based technology company operating apps and websites finding real-time fuel prices at more than 140,000 service stations in the U.S., Canada and Australia.

  • Looking state by state, the lowest average price for a gallon of unleaded gasoline consistently seems to be in either Missouri or Kansas. Why are prices lower here in America's midsection?

Missouri, Texas, Mississippi, Arkansas are always there among the lowest, but Kansas — for example — being more rural in nature, doesn't tend to sell as much gasoline, and that reality can delay prices changes.

  • What is the secret sauce for lower Show Me State pricing?

Missouri, even with the bill Gov. Mike Parson signed into law last year raising them, has low taxes when it comes to motor fuels. That's part of the reason. The state also has access to Wood River Refinery, operated by Phillips 66, a pretty large operation in Illinois right over the state line from St. Louis.

  • We've heard industry analysts say the fluctuating price of crude oil is the primary cause of gas price volatility. True?

It is true. The impact of the cost of a barrel of crude has a 50% to 65% impact on the price you pay at the pump.

  • Summer gasoline is coming, yes?

In some ways, it already is here. Refineries made the switch May 1. Retailers have the month of May to purge out winter gasoline blends in order to meet the EPA's June 1 deadline to make the switch. A specific and strict environmental formulation is used between June 1 and Sept. 15 because ozone pollution interacts with warmer temperatures. We call it 'winter' and 'summer' gas but in reality, it's non-stringent versus stringent gasoline.

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  • Here in Cape Girardeau County, an electric vehicle readiness plan is being developed. Do you foresee a major move to EV in America or is today's fascination with electric a blip caused by today's markedly higher fossil fuels?

I think it's clear the shift to EV is intensifying or accelerating. Having said that, EV still represents a very, very small percentage of vehicles on the road today. EV doesn't make sense for everyone although it is more attractive in denser population centers such as St. Louis and Kansas City. Again, a foundation for cheap gas prices is proximity to infrastructure, to refineries. In rural Missouri, EV probably makes less sense because of the cost of building reliable electric infrastructure.

  • Why are gas prices such a barometer of economic health? Here's a scenario: If I put 20 gallons in my tank and the prices just went up 5 cents, I'm paying an extra dollar for gasoline that day. I'll spend more to use a non-network automatic teller machine and will think nothing of it.

Gas is a barometer of economic health because every service station has those bright and shiny LEDs burning into our retinas. I don't know where the law came from years ago requiring gas retailers to post their prices out front but they represent the most visible prices in all of America. Probably any motorist could tell you what the gas price was this morning on the way to work, so it becomes a talking point at the water cooler. Also, don't discount the fact Americans are powerfully attached to their automobiles. A car or a truck represents a physical symbol of one of our republic's most cherished values: freedom. A sense of freedom is brought not by your two legs but by your four wheels.

  • We'll see oil company CEOs appear before Congress periodically and it seems they collectively shrug their shoulders when asked why gas prices have shot up. Fair assessment?

People inherently think all oil companies are the evil of the world, which only exist to maximize profit off the motoring public. The way gas prices work is not too dissimilar to the housing market — and prices there have shot up, too. The perceived value of your home is ultimately not set by you but by the market, by the law of supply and demand. Home prices are up because of a shortage of homes for sale. The market determines whether prices go up or down. COVID caused oil companies to curtail production; they stopped producing as much product. Although a lot of factors go into the price of gas, less gasoline generation is generally going to lead to higher costs at the pump. Early on in the pandemic, home building slowed because people were scared to buy. Look what's happened. With fewer houses available to be purchased, the prices of ones on the market went up — often substantially.

  • How does someone get to work full-time as the chief of petroleum analysis?

Intense curiosity. It became an obsession for me to figure out something — for example, the up and down of gas prices — that nobody seemed to understand.

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