James Runyan, President and CEO of Black Elk Refining, which is the company that owns the refinery in Newcastle, Wyoming, says at 14,000 barrels a day, they've got plenty of supply right now. The demand, however, is not there. In order to get rid of the gas they have to drop the price.
In the summer, the population in the Rocky Mountain Region jumps, increasing demand, but in the winter months there are fewer people. Still, one thing remains constant: gasoline production.
The refinery cannot decrease its gasoline supply even though the demand slows. That's because they would not be able to fulfill their diesel and jet fuel contracts. So, in these slow months, the refinery sells gas on the spot market. "They end up coming from different regions to get fuel when it's advantageous for them to truck it from here to there," Runyan said. Trucks from as far south as Salt Lake City, Utah make their way to Newcastle to transport gas. Within two months that will end. "If we left our prices where they are now, we'd be sold out in a day and there wouldn't be any fuel anyway," Runyan said.
So while we can count on prices at the pump going up. It's a pretty safe bet that they'll drop next winter.
** Sixty percent of the oil piped into the Newcastle refinery is from the Powder River Basin and 50 percent is from the Bakken oil fields in North Dakota. Of that, 50 percent is made into gasoline, 30 percent into diesel and 15 percent is reserved for jet fuel.