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Why is Winter Fuel Cheaper Than Summer Fuel?

Winter can get expensive. The cost of heating your home increases, plus all the gift-buying and activities over the holidays can stack up too. But there’s one area where you can make savings over the colder months, and it’s not always on your Unicom insurance policy, fuel costs are always cheaper in the winter than in the summer.

Fuel price rices for driversIndividual drivers as well as professionals in the motor trade have noticed the price-climbs in summer, and the reduced costs in winter. But have you ever wondered why it fluctuates like this? There’s not one single factor, but rather a combination of reasons that make it cheaper to run your new and used cars from October to March (not factoring in the price of de-icer, of course…!)

One of the reasons, which you might have already been assuming all along, is to do with demand. Summer means time off work and school, plus good weather (well, hopefully), together creating the perfect conditions for lots of journeys to fun days out. The rules of supply and demand mean that the more fuel people want, the higher they can push up the prices. Makes sense, right?

Another issue, also related to supply and demand, is to do with scarcity. Energy companies carry out all their maintenance on oil refineries in the spring, meaning they have to shut down operations until early summer. That means there’s less fuel than usual being produced, and the lower supply makes for higher prices, as it’s a scarcer commodity. It’s like how rare football cards are worth more, or limited-edition art prints, or a family holiday where everyone gets along, and nobody argues about politics.

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That’s not the end of it. There’s an even more significant reason, which is that you are buying different fuel in the summer compared to the fuel you buy in winter. Just as ordering vegetable soup will cost less than lobster bisque, these types of fuels have different manufacturing costs and therefore carry different prices. Here’s how it works…

Twice a year, there is a “seasonal gasoline transition” that takes place, where the fuel types change over, and prices will immediately reflect the switch. Winter-grade fuel is cheaper to manufacture than the more expensive summer-grade fuel because of its chemical make-up. That’s because, in a drive to cut down on air pollution, the Reformulated Gasoline Program (RFG) of 1995 determined that summer fuel must evaporate at a higher temperature, whilst winter fuel must evaporate at lower temperatures. It was a change instigated by the Environmental Protection Agency (EPA) in a fight against smog and pollution in summer months (ozone season being from June until mid-September). Evaporation speed is measured with RVP: Reid Vapour Pressure, and using this measurement, the formulations are altered to create a lower RVP in the summer, and higher in the winter. It just so happens that the summer-grade fuel costs more to make, compounding the other supply and demand factors to make July road trips pricey compared to December trundles around town.

Thanks to this change in legislation, though, the air is cleaner than it would be otherwise, which is a great reason to pay a little bit extra (or less) next time you’re at the pump.