However, what we are seeing today is a direct result of a government policy that imposes layer upon layer of uncoordinated regulations that not only drive up costs, but also take away the flexibility the industry needs to respond to new demands. The industry has consistently warned the government that such consequences would be the result of such policies. They are a reflection of increased costs and tightness in supply, particularly in the Midwest. Crude oil costs are the single largest components of gasoline costs and petroleum refiners, marketers and retailers have had to pass those increased costs along to stay in business. U.S. refiners are running at record levels and are producing large amounts of gasoline, equal or greater than in most recent years, but U.S. motorists are also driving more to meet the demands of their busy lives.
High demand puts upward pressure on prices.
New and varied gasoline specifications also affect prices. In the Midwest the majority of reformulated gas is blended with ethanol because of its ready availability in the region. RFG blended with ethanol is more difficult to produce because the hydrocarbon portion must have lower evaporative properties to accommodate ethanol's higher evaporative qualities. That has contributed to lower supplies in the region. The uncertainty brought on by a recent decision by a federal appeals court in a gasoline patent dispute has potentially significant implications for the RFG programs.