CAMARILLO, Calif. -- Self-serve regular jumped 20.27 cents in the past two weeks, to $2.5514, not from crude, which has been remarkably stable for several weeks, but from downed refining capacity and spot market jitters over potential shortage a special gasoline demand surge, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
Planned pre-Summer maintenance, accidents and even small animals invading power plants converged of late to put total U.S. refining [image-nocss] capacity utilization at a low 58%. Prices are not yet high enough to attract boatloads of imports to augment supply; in face, the average price sits 47.42 cents below that of last August (the all-time record high), and is very unlikely to meet it this year.
Government Adds Month to Spring Driving
Refiners are squeezed by their idled capacity and roaring demand, and it is not over. Gasoline demand, up seasonally as well as year on year due to economic growth, isas of March 11effectively acting like Spring has already sprung. Daylight Saving Time, already a factor in April's normal consumption climb in the past, is now in effect. Until April 11, when DST kicked in last year, motorists have an extra hour per day of greater safety and convenience in gasoline consumption. This will add something to our already strengthening demand if even a small fraction of motorists take advantage of the opportunity.
Tough Timing for Gasoline Supply, Industry Image
Refiners have these multiple gasoline supply pressures at the exact same time that vapor pressure reductions for smog prevention always hit them with supply and cost penalties. The use of ethanol exacerbates the problem, and recently higher ethanol prices add some insult to injury to refiners in a special Spring squeeze.
As the planned and unplanned refining capacity reductions continue to be reversed, and U.S. prices attract more imported product, gasoline prices will peak and then fall, which could easily occur next monthif the crude oil market allows.
The refining margins are up in the past two weeks, but they are meaningless in the case of downed plants. Retailer margin improved, but remain very low in many locations. Both refiners and retailers are reaping negative PR instead of kudos for their efforts to maximize gasoline supply at competitive prices.
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