South Dakota gas prices are projected to rise as oil consumption continues to grow both domestically and abroad.

Spring is typically the time of year when prices see an uptick of around 10 to 20 cents as oil refineries switch to a cleaner burning summer gasoline. According to Patrick DeHaan, a petroleum specialist with Gasbuddy.com, there are several reasons for the switch, not the least of which are Environmental Protection Agency rules.

“Prices have gone up in the last six weeks,” he said. “Some refineries do maintenance before making the switch so there is lower production and more expensive ingredients.”

According to the Energy Information Administration, there is a significant amount of regional variation in the price of gasoline. The average price per gallon in South Dakota for March was $3.78 to $3.88. Which was actually below the national average of around $3.94 per gallon.

One of the largest factors in the state is transportation. There are no refineries in South Dakota, which means all gasoline sold in the state must be brought in from other areas. The nearest refinery to eastern South Dakota is actually in Minnesota. The Black Hills area has a refinery just across the Wyoming border, giving Rapid City some of the cheapest gas in the state at around $3.49 a gallon.

Gas stations themselves ultimately set the price of the gasoline they sell, and have their own unique challenges to meet. Deawna Leitzke the executive director of the South Dakota Petroleum and Propane Marketers Association said that one of the biggest challenges is the price credit card companies charge for

 

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processing fees.

Gas stations can be charged as much as two percent or more of every transaction, which stations have to along with the other factors affecting price.

“It’s the cost of business and stations will decide what they charge based on that,” DeHaan said.

Speculation on oil commodity futures contracts by brokers on Wall Street may also play a part in the price of gasoline. DeHaan believes there is some impact but the extent to which it affects prices is hard to track.

“All we have is a suspicion that speculation is driving up prices,” he said.

Oil prices in the United States are up 8.9 percent over last year due to a number of factors not the least of which is an increase in demand. The largest single influence on gas prices is the price of crude oil. Demand for crude surged during the last decade, with emerging markets like China and India buying up far more of the world’s oil than they were previously.

Higher global demand is just one of many forces causing prices to rise. Variables like transportation, speculation in the commodities markets and several drops in production are playing their part as well. Unrest in oil producing countries like South Sudan, for instance, has served to further restrict global crude oil supplies, especially for Europe.

Gasoline prices have been higher in the past, but only once. In 1980 the price of oil surged following a series of crises in the middle east. Adjusted for inflation, the cost of driving a mile in 1980 was 23 cents on average. Today it is around 16 or 17 cents per mile on average.