September 19, gas prices in Idaho are about 70 cents above the national average.  One local TV station tried to give the usual explanation by saying it’s a mix of regional demand and state taxes.  FAIL!

I just checked on demand, and according to the latest numbers from the U.S. Energy Information Administration, demand for gasoline across the country is still below last year’s numbers.  On August 26, 2011, the four week average demand for gasoline was at 9.169 million barrels per day.  Compare that to the four week average of a year ago at 9.261 million barrels.  So there is a slight decrease in demand.

Regarding fuel taxes; there has been no increase in Idaho fuel taxes since 1996!

What is happening is that production of fuels has been dropping.  In other words, production is falling faster than demand, and that has the same effect as demand going up; prices go up (when there is less of something, in relation to demand, it becomes more valuable).

According to U.S. Energy Information Administration, PADD 4 gasoline production is down from last year. PADD 4 includes Colorado, Idaho, Montana, Utah and Wyoming.  The four week average for “finished gas” production, for August 2011 was 0.273 million barrels per day.  Compared to last year’s production of 0.296.

In other words, fuel producers are deliberately keeping production just under ‘demand’ in order to keep prices high.