Spring 2014 Gasoline Price Rally Has Peaked
GasBuddy projects lower Memorial Day prices vs. year ago for many regions
BROOKLYN PARK, Minn. -- The spring 2014 gasoline price rally has peaked, according to a forecast from fuel analysts at GasBuddy.com.
"Since Feb. 7, gasoline prices have been on an upward trajectory in a majority of the U.S., and at least for now, prices have broken that upward trend and have stabilized," said Patrick DeHaan, senior petroleum analyst at GasBuddy, in a recent blog post. "By Memorial Day, if there aren't major refinery kinks that develop, we could see the national average dropping into the $3.50s, or perhaps even lower."
Gasoline prices probably reached their peak on April 29, when they hit $3.658 per gallon, according to DeHaan. This is because many of the issues that helped drive gasoline prices up 35 cents per gallon (CPG) earlier this spring have eased: domestic terminals have transitioned fully to summer grades and refineries have finished about 90% of their spring maintenance. In fact, U.S. refiners are processing an extra one million barrels per day of crude vs. the same time last year.
U.S. consumers spent around $11.7 billion more on motor fuel this April compared to last, DeHaan noted, but May will offer respite. The average price for gasoline last Memorial Day weekend was $3.63 to $3.64 per gallon, which is around where prices have averaged during the opening days of May 2014.
GasBuddy analysts forecast prices running three to 10 cents per gallon less than this average by Memorial Day weekend.
California may see the biggest drop between now and the holiday, with wholesale gasoline prices trending 30 to 33 CPG lower than three weeks ago, and demand declining. The Great Plains and Great Lakes states may also see a gradual decline in prices, while prices in the Southeast could fall to $3.25 per gallon or less. The Northeast could see the tightest market for fuel, said DeHaan, because of fewer imports to that region.
GasBuddy said it expects gasoline prices will also reach the lowest summer average in several years, thanks to record-high oil inventories and refineries back at near full production. This week, Lubbock, Texas, has reported the lowest gasoline prices, averaging $3.30 per gallon, followed closely by Albuquerque, N.M., Tulsa, Okla., Amarillo, Texas, and Billings, Mont.
California, meanwhile, has seen its high gasoline prices ease, with prices down 4 CPG in Santa Barbara, 3 CPG in Los Angeles and Orange County, and 2.5 CPG in Ventura.
Fuel prices are still exposed to major events such as storms, power outages and geopolitical disruptions, however. DeHaan said that the United States is more vulnerable to price swings during hurricanes because so many refineries are located on the Gulf Coast and because of export commitments with Central and South American countries.