On February 23, 2022, gasoline prices exceeded $ 6 per gallon at a gas station in Los Angeles, California.
Frederick J. Brown | AFP | Getty Images
Gasoline prices are fluctuating, but can continue to rise sporadically, with more drivers likely to pay $ 5 or even $ 6 per gallon during peak summer driving seasons.
According to AAA, Thursday’s national average for unleaded gasoline was $ 4.23 per gallon, down 5 cents from a week ago and 10 cents below its recent record high. However, analysts expect pump prices to begin to rise as oil prices soar this week and gasoline prices in the futures market rise.
Jonquil Duff, a partner at Again Capital, said: “In California, I saw $ 7 at some stations.”
California drivers have been hit hardest, paying an average of $ 5.88 per unleaded gallon across the state. This is partly due to tax increases and a unique blend of West Coast fuels. At this point last year, the national average was $ 2.87 per gallon, and Californians were paying $ 3.88 per gallon, according to AAA.
Drivers in Los Angeles County pay an average of $ 6.03 per gallon. The average price in Nevada is $ 5.17 per gallon, while the average price in Washington is $ 4.72 per gallon.
Excluding Illinois, it costs $ 4.49, with lowest prices in the Midwest and South. According to AAA, Texas and Iowa average $ 3.88 per gallon, while Ohio and Georgia average $ 3.99 per gallon.
Some states have rolled back or are considering rolling back gasoline taxes. Starting April 1, Connecticut plans to set a three-month moratorium on a 25-cent per gallon gasoline tax.
Maryland suspended a petrol tax of 36 cents per gallon last week, with an average price of unleaded petrol in pumps of $ 3.79 per gallon, a gallon in neighboring Pennsylvania, a state with high petrol taxes. It is well below $ 4.31 per. Georgia has also stopped gasoline taxes.
Democrats in the US Senate and House of Representatives are proposing a bill to temporarily raise the federal gas tax by 18.4 cents per gallon. Those suggestions were referred to the committee.
How high can the price be?
Gasoline prices fell from a record $ 4.33 per gallon of unleaded gasoline on March 11. Gasoline prices have fallen as oil prices have fallen, but crude oil has risen again, and analysts say gasoline prices could rise as well.
We do not know how high the price of pumps will be, especially during the peak summer driving season from Memorial Day to July 4th. Analysts say it depends on fluctuating oil prices as the world is scrambling to replace Russia’s oil exports.
“I don’t know the honest answer,” said Tom Croza, Global Head of Energy Analysis at OPIS. “I think you’ll see prices close to $ 6 per gallon on the west coast. I think the rest of the country is in camps between $ 4.25 and $ 4.75.”
Purification gap
Kloza said this year was a gap year for the global refining industry, losing some capabilities and making more planned refining operations online.
In North America, he said, the purification capacity is about 1.2 million barrels per day less than just before the Covid Pandemic in early 2020.
“The refineries in California, North Dakota, Wyoming and Newfoundland are one of those reused or reused to produce renewable diesel and sustainable aviation fuels,” Kloza said. Mr. says. Capacity was also lost when Shell closed the Louisiana Convent refinery, and Phillips 66 turned the Louisiana Alliance refinery into a storage facility after being damaged by Hurricane Ida, he said.
New refining capacities are expected to come online in Southeast Asia, the Middle East and Nigeria, according to Croza.
“These refineries are designed to maximize the yield in the center of the refined barrel, allowing us to produce large quantities of diesel and jet fuel,” he wrote in a memo. “But with the highest uncertainty in crude oil supply since the 1970s, the rest of 2022 and the beginning of 2023 will depend on existing global capacity.”
Analysts said crude oil could fall sharply if the Ukrainian conflict ended, but the situation is uncertain. Currently, there are an estimated 2 to 3 million barrels of Russian oil on the market per day. Russia also exports about 2.5 million barrels of refined products per day, primarily to Europe, and the world also makes up for some of its lost supply.
For every $ 10 in oil price per barrel, gasoline prices usually rise by 24 cents per gallon, according to Croza.
Although the US gasoline supply is slightly below normal, refiners are operating at 91% capacity and should be able to supply enough gasoline to meet demand, Kirduff said. increase.
Diesel fuel has already exceeded the $ 5 standard nationwide, with an average of $ 5.05 per gallon on Thursday. Analysts said the market is much tighter and could put pressure on gasoline prices if refiners switch more capacity to produce diesel.
The United States is a net exporter of refined fuels, exporting about 1 million barrels of gasoline per day last week. But at the same time, according to the US Energy Information Administration, the United States imported 268,000 barrels of gasoline per day.
One way to prevent the shortage in the coming months is to suspend US requirements for summer fuel, Kirduff said. Refineries are usually temporarily shut down at this time to remodel for a transition to better fuels in warmer climates.
“Shaking the patchwork of summer gasoline environmental regulations will significantly reduce pump prices and help consumers,” he said.
Consumers are seeing prices rise rapidly, but petrol retailers aren’t scooping up bigger profits on average, Croza said.
“Currently, the typical retailer margin in 50 states is 33.4 cents per gallon, which is in perfect agreement with the situation over the last few years,” Kloza said.
Fluctuating price
Drivers can see significant differences in gasoline prices not only by state, but also by stations in their neighborhood.
Sarrisalbat, executive director of the New Jersey Gasoline Convenience Store Automobile Association, said gasoline prices are fluctuating and fluctuating so rapidly that 1,000 members of the association are struggling to keep up with price fluctuations.
“I’ve been monitoring wholesale prices. One day it goes up 20 cents, the next day it goes down 15 cents, then it goes down 20 cents. This was an absolute roller coaster,” he said. .. “It’s like winning a lottery when you get a gas delivery on your day off.”
Fluctuations in oil prices are behind pump price volatility. Intermediate crude oil futures in western Texas were trading down Thursday, with the prospect of a deal allowing Iran to export oil in exchange for a nuclear project agreement.
Prices soared on Wednesday when the Black Sea’s Caspian Pipeline Consortium Terminal was hit by a storm and reportedly stopped loading more than one million barrels of oil per day in Kazakhstan and Russia.
WTI crude traded on Thursday at around $ 112.40 a barrel, well below its recent high of $ 130.50 a barrel. Last week it was below $ 95 a barrel and there is a wide range of trading.