CAMARILLO, Calif. -- The U.S. average regular grade price is $3.0577. It is up 6.16 cents in the past three weeks. Premium grade at retail is nearly $3.29; midgrade, $3.17. The weighted average of all three grades of retail gasoline on July 13: just under $3.09, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
Crude oil price hikes worth about 11 cents per gallon equivalent during the same period are one reason retail prices turned upward. The other is two [image-nocss] more significant domestic refining problems (in Indiana and Kansas) offsetting the ongoing comeback in refining operations that had allowed a drop of nearly 19 cents at the pump since prices hit their all-time peak on May 18.
The average regular grade price rose because of these regional retail price changes: West and Rockies, down 6-7 cents; Gulf and East, up about a penny per gallon; and Midwest prices, up 24 cents in three weeks.
Weighting by volume of gasoline consumed (because, for example, California consumes much more than North Dakota does) U.S. consumers in the aggregate paid just 6 cents more. The diverse price directions since June 22 have been dramatic: For example, drops of 16 cents in Salt Lake and 11 cents in Portland, Ore., versus 42 cents up in Minneapolis and 33 cents in Wichita.
This year has seen not only record retail prices, but also record losses of gasoline production at refineries. The flooding that closed Coffeyville's refinery in Kansas and the leak that vastly worsened BP's downed capacity to process crude at Whiting, Ind., hit the market in the middle of the Summer driving seasoneven as other idled capacities around the country were returning.
Around the country, gallons are on the move chasing higher prices during this product dislocation. And coming from offshore, gallons are chasing high U.S. prices.
If not for foreign refiners sending gasoline to the United States, the recent retail price hike would have been much greater. If not for foreign oil producers negatively affecting world supply and trader sentiment, the price increase would have been nil or negligible.
With about six more weeks of summer demand to cover as U.S. refinery operations normalize, continued high retail gasoline prices can be expected even if crude prices soften. From here, it looks an Indian Summer of plentiful supplies and lower prices.
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