These price increases, occurring fully two months before the summer season, have caused alarm. The familiar cries in the press are back and predictably, politicians are looking for the usual suspects.

Obviously, crude oil prices can in part explain the recent gasoline price increases, which almost mirror last year’s. Crude oil, which a few weeks ago seemed to be going down towards a more stable $60 per barrel (or even lower), moved up again, surpassing $70, due to the Iranian nuclear ruckus and to a lesser extent, Nigeria and Venezuela.

The cost of crude oil usually accounts for about 47 percent of the price of gasoline at the pump. Compared to a year ago, crude prices have risen by about 25 percent so we should expect gasoline prices to jump by about 12 percent. A year ago, gasoline was trading for $2.25, so the rise in crude prices accounts for about 27 cents of the price increase. Instead, gasoline prices are 40 to 45 cents higher than a year ago. Diesel, whose price depends on crude oil by about 55 percent, should be roughly 14 percent (about 32 cents) higher than this time last year. It is in fact 34 cents higher, a much more predictable increase.

What makes gasoline so much more expensive is clear. The U.S. now has the most stringent and complex motor fuel regulations on earth. And American motorists are paying the price.

The biggest culprit is the change in gasoline oxygenates. Refiners are halting their use of methyl tertiary-butyl ether (MTBE) and replacing it with ethanol produced from corn. Many states have already mandated the change, or at least outlawed MTBE use. Oil companies are jumping on the bandwagon, fearing more lawsuits.

While as much as 15 percent (by volume) of MTBE has been blended in gasoline to provide the required level of oxygenate, its energy content is similar to that of gasoline. Therefore, there is no reduction in engine performance and total mileage achieved for a given volume in the tank. On the other hand, ethanol has a lower energy content than gasoline. In fact, it takes 1.6 gallons of ethanol to provide the same energy as a gallon of replaced MTBE. This means that consumers using the same number of gallons of the reformulated gasoline will travel roughly 5 percent fewer miles per tank.

Ethanol availability and handling problems add more costs to the supply chain. There are few suppliers of ethanol outside of the Midwest and transporting the fuel is extremely inefficient. Ethanol attracts water, which means it cannot be shipped by pipeline. Instead it must be trucked, or shipped by barge. Nor can it be blended with gasoline at the refinery; it must be blended at bulk terminals near the gasoline retailers. That requires more tanks and more hardware, all of which translates into more costs.

Ethanol creates other problems for the refiners: to compensate for the ethanol, which has a much higher vapor pressure than MTBE, refiners must strip out the butanes and pentanes from the gasoline in order to comply with federal air quality rules. Losing the pentane and butane results in a loss in volume of about 5 percent. And don’t forget about the new low-sulfur regulations. As of January, new federal laws required refiners to reduce the sulfur in their gas from 90 to 30 parts per million. That means refiners must hydrotreat their gasoline, which results in another 2 to 3 percent loss in volume.

Finally, many U.S. refineries are obsolete and therefore need more maintenance. That means they will not be running at full capacity in advance of the summer driving season. In short, get ready for higher prices. And pray we don’t get hit by more hurricanes.