Good Question

Why Do Gas Prices Jump Dramatically In Summer?

GREENWOOD VILLAGE, Colo. (CBS4) ― Year after year in Colorado, the price of gasoline pops up in summer as reliably as an inflatable raft at the pool.

"It's crazy," said one woman at a Greenwood Village filling station. "I'm only getting $5 because I can't afford that much."

And that was only the 10 cent price hike of late April. Memorial Day and June are still ahead.

So why do gas prices go up in summer? First of all, it's demand.

• Summer vacations mean there are more people on the road.
• Demand across the country goes up by 5 percent.

"Here in Colorado, it may be 20 or 25 percent greater, which surprised me," says Steve Douglas of Suncor, the company that owns Colorado's only refinery.

Suncor produces about 35 or 40 percent of the gasoline sold in Colorado.

"We have to import the other 60 or 65 percent. And our prices have to be high enough to attract that gasoline in. We compete with the other states for that gasoline in the summertime."

There's also a difference in the gasoline. In summer, the mixture has to be less volatile because of the heat. Butane is at the high end of volatility and has to be taken out of Summer mixtures.

But CBS4 asked if that was responsible for the increase and the answer Douglas says is, "No, it's largely supply and demand."

Supply is tight in summer because there's not enough refining capacity in the United States to meet the summer demand. Recent fires at refineries in Texas and Oklahoma could make things worse. Remember what happened when refining capacity went down after Hurricane Katrina?

So if the prices are higher in the summer, we asked why refiners don't make more gasoline in winter and hold it until summer?

"Tankage is very expensive, and typically we have about three days of storage here in Colorado."

So, with little storage, there's no room to hold gasoline over for months. Supply and demand is back. Douglas says the profitability is typically not in retail. In fact, of the gasoline stations owned by Suncor, the greatest profit is not in gas, but in bottled water. Water, sodas and other items available in convenience stores that have become common sites in the brightly lit stores behind the pumps of a gasoline stations are the big money makers.

For the most part, gasoline serves a role as the attraction.

It's the refiners who profit most in summer -- making up for slimmer winter profits.

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