Oil prices down, but will it show at pumps?

Written by Christina O'Haver, The Union Democrat September 20, 2012 03:22 pm

Although crude oil prices dropped dramatically this week, Mother Lode residents will probably not see significant changes in gasoline and propane prices immediately, according to experts.

Crude oil prices fell below $96 per barrel on the New York Mercantile Exchange on Tuesday, after already plunging more than $4 on Monday afternoon. 

The U.S. Energy Information Administration identified crude oil as the main contributor to the large changes in gas prices across the country in recent years.

U.S. refineries can produce about 19 gallons of gasoline from a 42-gallon barrel of crude oil.

AAA Northern California spokeswoman Cynthia Harris agreed that gas prices are centered around crude oil costs, but said it takes time for those fluctuations to affect consumers at the pump. 

Other factors that influence fuel costs include weather, turmoil in the Middle East, conditions at refineries, peak travel times for consumers and seasonal blends of gas, she said.

“The volatility in gas prices is really the norm at this point,” Harris said, adding that speculation of any disruptions in the production or distribution of gas drives up prices.

Harris said gas prices are beginning to stabilize throughout Northern California after soaring over the summer.

Gasoline prices in Sonora ranged from $3.99 to $4.15 per gallon of unleaded on Tuesday, according to Californiagasprices.com. A week ago, they ranged from $4.03 to $4.19.

The Sonora gas station with the cheapest fuel was the Arco at Mono Way and Standard Road.

San Andreas gas prices were at $4.13 on Tuesday. 

The national gas price average was $3.86 on Monday, which is 3 cents higher than the average price a week ago, according to AAA. 

Crude oil prices also play a role in the price of propane, which is a popular energy source in the Mother Lode.

Debbie Bertini, owner of Bertini Plumbing, Heating & Air Conditioning in Avery, estimates that 70 percent of households in Tuolumne and Calaveras counties use propane. 

However, like gas, propane prices do not usually reflect changes in crude oil prices immediately, according to Lesley Garland, president and CEO of the Western Propane Gas Association.

Garland said, if the drop continues over the next couple weeks or months, crude oil prices will undoubtedly alter the price of propane.

Garland added that, in addition to having an impact on production costs, changes in crude oil prices can affect distribution expenses. If fuel prices rise due to the changes, propane delivery costs increase as a result.

Weather conditions also contribute to the distribution costs of propane, as well as the demand, according to the California Energy Commission. 

The commission cited weather and proximity to suppliers as the two main reasons why propane prices vary nationwide.

Propane is normally created as a byproduct of petroleum refining and natural gas production, which makes natural gas prices another factor in propane costs, Garland said.

Ernie Burgess, manager of the Amador County branch of Kamps Propane, said low natural gas prices have been keeping propane costs down. 

The natural gas price for the U.S. was $4.20 per wellhead in June 2011 and decreased by $1.66 to $2.25 in June of this year, according to the U.S. Energy Information Administration. Prices for 2012, which are only available through June, peaked in January at $2.89 and hit bottom in April at $1.89. 

Kamps Propane prices have slowly been creeping up over the past six weeks and, on Tuesday, reached $2.09 per gallon. The price is lower than this time in 2011, but last year’s prices were unusually high, according to Burgess.

He and Garland said that propane prices in the area typically increase during winter months due to supply and demand.