‘Everything is contingent on what happens with the strait’: Gas expert weighs in on cost as Spokane residents feel pinch at pump

With the two-week ceasefire in the war between Iran and the United States appearing to hold as of Sunday, many Spokanites are left wondering why they’re still feeling the pinch at the pump.

For Arlene Reid, the rising cost of gas has made it so she hardly ever fills up the tank of her green Toyota RAV4 to the brim.

“I put what I can in and wait until I get paid again,” the 60-year-old said.

Reid recently retired from a job as a plant technician and switched to a new job where she can work from home. Her prior job required her to install and maintain plants in commercial and residential spaces all around Washington and Idaho. It also forced her to drive about 300 miles a week. If she never moved on from her previous job, she has difficulty imagining how she would make ends meet today.

Although she works at home now, she still drives about 100 miles a week to take her mother, who lives on the state line, out for breakfast and lunch about twice a week. What used to cost $35 for a tank of gas 10 years ago, she said now costs about $50.

While cumulative inflation has gone up by about 36% in the past decade, other factors are at play when it comes to why gas is so expensive.

Patrick De Haan, the head of petroleum analysis at GasBuddy, estimates that about 85% of the current spike in the cost of a gallon can be attributed to the U.S. war with Iran and how Iran has retaliated.

The price of petroleum and diesel, he said, are contingent on whether the U.S. and Iran can reach an agreement.

“There’s not really a worst it could get,” De Haan said. “It’ll just keep going up until the Strait (of Hormuz) reopens. Well, within limitation. If global demand starts to decline to better match the new realities of the strip being blocked, I suppose that’s the limit. But $5 gas. $6 gas is possible. $7 gas could happen. I don’t think it gets to double digits.”

De Haan said that worldwide demand for oil would have to drop by about 20 million barrels to balance a market that’s now making 20 million barrels less than it was months ago. But that means a lot of businesses, people and organizations would to have to stop driving, which is impossible for some folks, like farmers, truck drivers and others who depend on gas and diesel to make ends meet.

“Diesel fuel is really the fuel that powers the global economic engine,” he said. “And so there’s going to be a lot of trickle down.”

He said evidence can already be found with companies like Amazon, UPS, FedEx and USPS who have adjusted their pricing as the cost of fuel soars.

Charles Deherrera is a welder from Spokane who drives a diesel truck. A full tank a couple years ago cost him around $100. Now it costs $150.

Regardless, the price of fuel hasn’t stopped him or his family from doing things they enjoy, like ripping their dirt bikes around up north. He’s hopeful that the price of diesel will drop, but said it’ll probably go over $7 before it comes back down. He imagines this summer will be a rough one.

“Everything that goes up must come down,” Deherrera said. “Of course, it’s not going to go down to what it was 20 years ago. We just got to weather the storm. Things will get better.”

Deherrera and his family travel around a lot more during the spring and summer than they do any other part of the year. And they’re not the only Americans to do so, which is another reason, De Haan said, behind why gas prices are as high as they are.

“Gas prices always go up in the spring because of a couple different factors,” De Haan said. “Americans start to get outside more. They start to use their cars more, consuming more fuel in the spring and certainly into the summer. The other aspect is a changeover in the required type of gasoline.”

De Haan said gas stations switch to a gas that burns cleaner during the summer. It also happens to be more expensive than what’s available in the winter. The other factor in the spike of gas prices is that refiners have to do maintenance before the start of summer.

“(Maintenance) limits how much of that summer gas they are producing at the time that it’s needed,” he said. “So those are the seasonal elements. But I would say that those are probably only 10% or 15% of the reason for prices going up since March 1. The other 85% or so is the U.S. war on Iran and how Iran has retaliated”

In the 17 years De Haan has worked at GasBuddy, he said nothing has come close to the current disruption. Even some of his colleagues who lived through the Arab oil embargo in the 1970s agree they’ve never seen anything like this.

The Evergreen State is the third most expensive state in the country to buy a tank of gas.

According to AAA, the national average for a tank of gas Saturday was $4.13. The average in Washington state is $5.39. Only California and Hawaii have higher averages with $5.90 and $5.65, respectively.

The average price for a gallon in Spokane County is $4.89, which is still expensive, but not quite as much as somewhere like Seattle. Diesel, meanwhile, has an average around $6.50 per gallon in Spokane County, compared to $6.94 statewide.

Washington’s 2023 Cap-and-Invest program is also adding to the costs for local drivers. The program requires refineries that want to produce fuel in Washington to buy carbon credits to offset the pollution those refineries emit when producing fuel. De Haan said this tax makes gas about 40 cents more than it would be otherwise.

“California has been the trendsetter and Washington has been the trend follower,” De Haan said. “California not only has a cap-and-trade program, but it has a low-carbon fuel standard, it has the highest taxes, and it has the most regulations and rules on refineries.”

In the past six months, De Haan said two major refineries in California closed their doors permanently or moved elsewhere. Just those two refineries accounted for roughly 20% of the Golden State’s gas supply. And what affects California impacts the rest of the West Coast.

“California should be a lesson on how not to operate a state, and this is just from my purview of refineries,” he said.

California and Washington, De Haan said, are the only two states on the West Coast that have refineries. Because many have left due to stringent rules and regulations, they’ve had to import some of their fuel from countries in Asia, which have equally been affected by the closure of the Strait of Hormuz.

“You’re lucky in Spokane,” De Haan said. “Most of your gasoline is coming from the Rockies, not from California.”

But others, like Jayla Knights, are not feeling so lucky.

Knights said a year or so ago she used to pay $55 or $60 to fill up the tank. Today, it’s closer to $75 for a full tank.

“It definitely affected me a lot,” she said. “Because I used to take a little drive every once in a while. Or go to the Walmart all the way in (Spokane Valley), because I don’t like the one in Airway (Heights). Then with me being a student as well, that definitely added an extra cost on top of everything that students already paid for.”

Knights is the student body president at Spokane Falls Community College and said she used to drive out to Cheney after class at least twice a week because Cheney’s library is open longer than all the other libraries in Spokane County.

“Now I don’t,” she said. “Maybe, like, once every two weeks.”

Knights is from Baltimore. She said she went back home two weeks ago to visit her family. A year ago Baltimore residents paid an average of $3.22 a gallon, according to AAA; today they’ll pay $4.12. The gas prices in Baltimore are starting to look similar to prices in Washington, she said.

De Haan said that usually the farther from the coast , the better – at least for fuel prices .

“The further inland your gasoline is coming from, the cheaper it tends to be,” he said. “Like Seattle, you can just slap oil, gasoline, diesel or jet fuel right on a barge and sail it overseas and sell it. Whereas refineries that I’m talking about in inland areas, they don’t have the easy ability to just export their gasoline to another country.”

Eastern Washington is better off than coastal areas because the refineries that Spokane gets most of its fuel from are places like Billings and Salt Lake City. Seattle and cities along the coastline get their fuel from highly regulated refineries that are suffering from the closure of the Strait of Hormuz, which usually sees approximately 20% of the world’s oil supply glide through their waters.

“If the strait is completely closed for three months, you’re going to probably hit $7 for gas,” De Haan said. “If the strait is partially opened, you might hit $5.50 for gas. If the strait is fully reopened, you’ll probably see prices decline into the mid-$4-gallon range this summer. I don’t know that I’ve had moments in my career like this, but everything is contingent on what happens with the strait.”