Gasoline is an expense most people deal with when traveling during the Labor Day weekend. Before hitting the road, people may consider how the season and even major weather events can impact state gas prices.
Currently, some people may be thinking about the amount of gas they will pay for their Labor Day travels while some may wonder how Hurricane Dorian near Florida could impact demand in certain areas, especially Texas.
Michael Noel, associate professor in the Texas Tech Department of Economics, said there are a variety of factors to consider about changes in gas prices.
Regarding weekend fluctuations, in Texas, the average retail price for regular gas decreased from about $2.33 per gallon on Aug. 26 to about $2.28 on Sept. 1, according to the GasBuddy website. Texas’ average retail price decreased throughout August with some slight increases between certain days.
The price of crude oil, or unrefined petroleum, is a huge factor Noel said affects gasoline prices regardless of the season.
“That by itself makes a 50 cent difference in prices,” he said. “That by itself makes a big difference and that’s why prices are cheaper this year than they were last year.”
The condition of local refineries is another factor Noel said could affect gas prices. Although, he said there is not much correlation between these factors and prices when it comes to weekend demand.
“There’s nothing really specific about right now. Prices go up and down.” he said. “Right now, it’s a little bit down, so that’s good. It happens after a long weekend, so all the better.”
During the summer in the northern hemisphere, Noel said gas prices are at their highest. He said a weekend does not matter when considering changes in gas prices.
A spike in gas prices typically takes place in February, early March and sometimes October, Noel said. Because there is a summer blend and a winter blend of gasoline, he said these spikes tend to occur.
“The summer blend is made because gasoline evaporates into the air, so they need to make it in a special way with special additives to prevent that leakage, and that’s for environmental reasons,” he said. “It actually costs more to make summer gasoline than it does to make winter gasoline.”
Refineries slowing down production to prepare for the change in gasoline blends is another factor Noel said contributes to the issue. He said these price spikes may not be seen on a graph, as crude oil prices, which are rarely constant, are the main determinant in gasoline prices increasing and decreasing.
Michael Giberson, associate professor of practice in business economics, said the seasonal effects on gas prices, which can take place when the two gasoline blends are changed around early October, is not the main cause of fluctuating gas prices.
“In order to see the seasonal effects, you have to be able to take out crude oil price effects because those are a bigger factor than the seasonal changes,” he said.
When traveling during Labor Day or anytime in the year, Giberson said one should take time to learn about the gas prices in around his or hers destination.
“If you’re going to have to refuel on your way, a tool, like GasBuddy, is really handy if you’re traveling in an area you’re not familiar with,” he said. “Generally speaking, even though there is a peak in demand, it’s not like there’s hugely a big difference in price between the Friday before Labor Day and a week earlier. Refuel when it’s convenient for you.”
Regardless of the minor changes in gasoline costs, any level of gas price decrease may be beneficial for people.
Phillip Simpson, a student from Houston studying medicine for his third year at the Tech Health Sciences Center, said even though he will not travel too much during Labor Day, decreasing gas prices always are good.
“I think it’s a win for students,” he said regarding how even the slightest gas price decrease would be beneficial for those traveling.
Despite not traveling during Labor Day, Simpson said he may need to fill his gas tank since gas prices are slightly decreasing.
In addition to a holiday prompting more travel, weather events may be another issue that could have an impact on gas prices.
As Hurricane Dorian inches closer to Florida, one may wonder if gas prices in Texas would see fluctuations similar to those impacted by Hurricane Harvey in 2017.
When Hurricane Harvey hit Texas, eight refineries in the state closed, according to a Fortune article. Gas prices in Texas nearly doubled, and one case saw prices reaching about $8 per gallon.
Hurricane Dorian may not have much effect on gas prices in Texas, Noel said. But Florida gas prices may see some changes.
“There’s not a lot of drilling activity in Florida, and there’s not a lot of refineries in Florida,” he said. “So, the effect of Florida prices could be very high, but the rest of the infrastructure will be fine.”
If Hurricane Dorian hit the Texas or Louisiana coast, Noel said multiple issues could arise.
“That is a completely different animal,” he said. “Because then you’re hitting where the major drilling operations are, you’re hitting major pipelines, the arteries in some sense, of the system that transports crude oil and gasoline all around.”
Hurricane Dorian is an example of a weather event Noel said has a huge impact on the supply and price of gasoline. He said Florida will have expensive gas prices, but Texas will hardly be affected because of the lack of oil production in Florida.