Gas prices in Colorado have soared this past week — they’re up an average of 17 cents per gallon in Fort Collins from a week ago after taking a dip the week before.
But is that a sign of things to come?
The average price per gallon in Fort Collins for regular gas is $3.29 as of Monday, according to GasBuddy.com, which tracks prices at 119 stations in Fort Collins. Statewide, the average is $3.32.
That’s up from a low of $2.57 in late January, and prices have been rising since then.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the price rises each spring as refineries perform maintenance that slows production and then transition to making summer blends. Prices usually peak in April or May, he said, and drop over the summer as production increases.
For the coming months, he expects prices across the country to remain “well below record levels” and to continue lower as we get closer to the Fourth of July.
“While the Middle East, hurricane season, refinery maintenance and other unexpected disruptions or weather events remain wildcards, this summer appears to be especially beneficial for motorists taking to the road,” De Haan said.
But there’s one more factor Coloradans need to be aware of: Reformulated gas is now arriving.
Will reformulated gas increase prices in Colorado?
Starting June 1, gas stations in nine Front Range counties, including Larimer, will be required to sell this less polluting type of gas, which is more expensive.
That’s because those counties are in an area that was deemed by the Environmental Protection Agency in 2022 to have a “serious” violation of ozone air quality standards. The out-of-reach area applies to parts or all of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Jefferson, Weld and Larimer counties.
That designation led to a requirement to sell federally approved cleaner fuel during the summer ozone season, which begins this year.
So from May 1, reformulated gas was required at petrol refineries and terminals, meaning it is now being rolled out to petrol stations.
“RFG will make its way to pumps during the month of May and may be sold at some stations prior to the June 1 deadline, depending on their individual supply needs,” Taylor Gillespie, director of public affairs for the EPA’s Region 8, told reporters. , to the Coloradoan.
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So how much will this increase gas prices? The answer varies wildly depending on who you ask: 3 cents per gallon to 60 cents per gallon with even higher peaks.
Governor Jared Polis, in a letter to the EPA asking the agency to grant Colorado a waiver to the requirements, said prices were expected to rise by 60 cents per gallon or more.
His April 4 letter said the Gulf Coast, a “highly competitive region with few supply constraints,” is seeing a 10 cents per gallon premium for reformulated gas, so Colorado can expect at least that kind of increase.
But he also said that a state study by Energy Analysts International Inc. shows that the most likely scenario in Colorado is a price increase of 60 cents, with spikes of up to another $1.
The letter states that Colorado’s existing supply networks are inadequate and that distributors will have to take extraordinary measures to meet demand.
Colorado is geographically isolated from the major Gulf Coast refineries and separated from the national distribution network, he said, and has insufficient refining capacity in the state, leaving it dependent on out-of-state fuel suppliers who could exit the market at any time.
But the EPA’s Gillespie said in an email to the Coloradoan on Sunday that the data assessment the agency is using estimates the potential cost increase to be 3 to 5 cents per gallon.
“Fuel suppliers to the (Denver Metro/North Front Range) market have made the necessary preparations after years of lead time to deliver a volume of RFG in a cost-effective manner consistent with historical market demand,” she said.
De Haan said current observations show the new gas in the Denver area costs 3 cents more per gallon, a smaller price difference than expected. In the Chicago area there is a price difference of 25 to 30 cents per gallon.
“I can’t fully explain to you why,” he said. “That would indicate to me that it is not very difficult for them to produce this together with other refineries in the region.”
He said the switch to reformulated gas typically happens well ahead of the deadline because operators don’t like the idea of putting products through their pipelines that can’t be sold.
That means the gas is already in circulation, he said.
“Motorists don’t have to worry about anything,” says De Haan. “In most cases, they are already pumping this reformulated mix,” depending on whether they are in the out-of-reach zone, he said.
However, he said there is one thing we need to worry about: a refinery outage, which could cause a wider price difference between reformulated and conventional gas.
He cited the winter 2022 fire that closed the Commerce City Suncor refinery.
“Then you saw how dependent you are on the refinery,” says De Haan.
According to Polis’ letter, that refinery supplies 38% of the gas to the Denver and Front Range markets.
Gillespie said the higher cost of reformulating will be somewhat offset by the better gas mileage cars will get when using summer fuel.
“This increased fuel efficiency also results in fewer trucks on the road to fill up with gas at the gas station. Greater fuel efficiency and longer run times on gas-powered equipment will mean less fuel for consumers at the pump.”
This article originally appeared on Fort Collins Coloradoan: Gas prices in Colorado have risen. What will reformulated gas do?
