Alkylate Shortage May Push-Up Gas Prices by .50 a Gallon

alkylate shortage may push up gas prices by 50 a gallon

Experts predict pump prices will spike by as much as 50 cents a gallon later this year, as refiners and gas stations switch from winter- to summer-blended fuels. Speaking to AP [via the Pittsburg Post Gazette], analysts blame an alkylate shortage. This little-known and expensive gasoline additive replaced MTBE two years ago, when regulators found the potentially cancer-causing additive seeping into ground water. The oil companies deny they’re limiting production of alkylate. Valero Energy GM John Pickering says their Paulsboro refinery in New Jersey makes enough alkylate to meet its needs, but concedes that there is a national shortage of the additive in the spring and summer. Other refiners say they’re reluctant “for competitive reasons” to reveal how they blend gasoline, or whether they face alkylate shortages. Little wonder Hawaii passed a law (yet to be enforced) requiring local oil refineries to reveal their pricing practices.

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  • Landcrusher Landcrusher on Feb 03, 2008

    As for close to losing money, no, but they were not quite raking it in either. Oil companies are being run less and less by petro engineers and geologists, and more and more by MBA's and Accountants. A dozen years ago, there was a definite boom and bust cycle (the oil guys are all about producing oil and would spend all sorts of money doing it), but now they invest as if they are in a constant bust. (Damn money men, if you are looking for a conspiracy on oil prices it is likely happening on Wall Street rather than in Texas. The oil guys used to reinvest everything and more when the price of oil went up, which always drove it right back down.) Also, when oil is low, they all stop bidding up government leases. That is why Clinton had to offer leases without royalties to get them to bid and drill back in the nineties. Of course, the US government and it's people reneged on the deal and there is now a fight to get the royalties paid. Yes, we ARE acting like a banana republic. That happens when less than half the voting public actually supports the government with tax dollars. As for alkalyte vs. ethanol. Both are oxygenates. I do not know specifics why or when one is used rather than the other, but I do know that transportation issues make it hard to use ethanol at all refineries. I will have to ask around to get to the bottom of that one.

  • KBW KBW on Feb 03, 2008

    Alkylate is used by pretty much all refineries. Its made by basically putting two butanes together. You need to blend it into other components to raise the octane and reduce the vapor pressure of gasoline. Almost all gasoline contains some alkylate, even the stuff with ethanol in it.

  • Gardiner Westbound Gardiner Westbound on Feb 03, 2008

    Oil is the only business where cutthroat competition drives prices up.

  • Landcrusher Landcrusher on Feb 03, 2008

    Gardiner, Huh? How does that work?