WASHINGTON & GAITHERSBURG, Md. -- After 20 straight days of declines, the national retail average for gasoline increased at the start of this week to $1.70 per gallon, according to AAA, Washington, D.C.
AAA cited a seasonal production decline at refineries as they get ready for presummer maintenance, as well as a more deliberate decline at Midwest operators in response to the worsening economics of growing gasoline supplies and falling oil prices. This production slowdown has bumped up Midwest gasoline prices, reversing the national average’s decline.
According to GasBuddy, Gaithersburg, Md., wholesale gasoline prices in the Great Lakes region jumped 72% between Feb. 9 and Feb. 12’s closing, which spiked retail prices last week and may possibly do so again this week.
In an interview with MarketWatch, GasBuddy senior petroleum analyst Patrick DeHaan said that in the short term, the possibility of 99-CPG gasoline—once thought strongly possible—“has vaporized” with talks of the Midwestern refinery production cuts.
Tom Kloza, global head of energy analysis at Oil Price Information Service (OPIS), Gaithersburg, Md., told MarketWatch that the economics of West Texas Intermediate (WTI) at less than $27 per barrel—a level hit last week—could be too poor for some refiners. With processing costs running around $5 per barrel, “you can’t buy crude for $27 a barrel and sell refined products for $25 a barrel,” he said.
Despite the increase, the national average is still at a multiyear low point. According to GasBuddy, the $1.695-per-gallon national average on Feb. 15 was its lowest point since Jan. 6, 2009. That said, it is not likely to fall below $1.592 per gallon, which would have put it at a 12-year low. National average retail diesel prices, meanwhile, fell below $2 per gallon for the first time since 2005, reaching $1.986 per gallon, according to GasBuddy.
AAA spokesman Michael Green told MarketWatch that some parts of the Midwest may still drop to 99 CPG or less in February, “but that vast majority of us will be stuck paying significantly more at the pumps.”
The biggest weekly increases in retail state averages were in the Midwest, AAA reported, led by Indiana and Ohio, both up 7 CPG, and Michigan, which was up 6 CPG. Meanwhile, 43 states saw their averages drop this week, led by Nevada (-12 CPG), California (-10 CPG) and Arizona (-10 CPG).
The highest state retail average at the start of this week belonged to Hawaii at $2.61 per gallon, followed by California ($2.40), Alaska ($2.26), Nevada ($2.07) and Washington ($2.04), according to AAA. The least expensive retail prices were in Oklahoma and Missouri at $1.41 per gallon, followed by Kansas at $1.44. Thirty-four states had retail averages below $1.75 per gallon.
While spring refinery maintenance should peak in April, according to industry experts, with a few ripples in retail gasoline prices over the coming months, the turbulence should stay relatively minor because of above-normal gasoline inventories and low crude prices. By Memorial Day, however, prices “are likely to be a good deal higher,” than this week’s average, according to AAA.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.