Local economist explains gas price increase - KCBD NewsChannel 11 Lubbock

Local economist explains gas price increase

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LUBBOCK, TX (KCBD) -

Gas prices in Lubbock are up. The average price is more than $3 a gallon, but a local expert says that's normal.

"The last three years in February, the price has gone up about 30 cents a gallon each of those months. We're seeing that again this month," said Michael Noel, Ph.D.

Noel is an associate professor of economics at Texas Tech University.

"Though we won't actually get the summer blend for another month or two, now is the time that refineries are starting to draw down their supplies to get ready to make that summer blend. When that happens you get an additional increase in price."

And there are other factors contributing to the current increase.

"Crude prices have gone up by $8 in the last couple of weeks. It's actually as high as it has been since last September," Noel said. "When you have an $8 increase in the price of crude that works out to about a 20 cent increase of the price at the pump."

The second has to do with the completion of the Keystone Pipeline.

"The Keystone Pipeline connecting Oklahoma and Texas and the Gulf Coast is one more pipeline that's getting the bottle neck cured, and while that's good for the rest of the country it's not quite as good for Lubbock," he said.

It's because the Keystone Pipeline was built in phases. The first goes from Alberta, Canada to Steele City, Nebraska. The second from Steele City to Cushing, Oklahoma and the third phase is from Cushing to the Gulf coast.

That was completed on Jan. 22. The fourth part of the Keystone Pipeline is what has been in the news. It's proposed to go from Alberta to Steele City, Nebraska but is waiting on government approval.

Until phase three was completed, all of the oil was bottlenecked in Oklahoma, making it more available to West Texas. It sold for about $25 less a barrel.

"Most people don't know but West Texas, Oklahoma and the Midwest has had a bit of a price break on gasoline compared to other parts of the country," Noel said. "It also has to do with the fact that it's been a very cold winter in the Northeast. Normally that wouldn't have an effect on crude prices but a lot of the Northeast runs on heating oil."

Noel says gas prices generally increase into March, which is bad news for families driving to a Spring Break destination, but there is a way to save some money.

"You should stick with the lowest gas, the 86 or 87 octane unless your vehicle tells you that you need something higher," Noel said. "Many people think there's a quality difference but there really isn't a quality difference. The only difference is some engines need higher octane."

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