On the Monday earlier than the Labor Day weekend, August 28, 2023, the retail worth of normal gasoline averaged $3.81 per gallon (gal) throughout the US. Over the previous 5 weeks, oil manufacturing cuts by Saudi Arabia, low U.S. gasoline inventories, and introduced refinery upkeep within the Northeast have elevated the common gasoline retail worth by 6%, or 22 cents/gal.
In response to our Gasoline and Diesel Gasoline Replace, after adjusting for inflation (actual phrases), retail gasoline costs going into this Labor Day weekend had been 4%, or 14 cents/gal, decrease than final yr.
Current manufacturing cuts by Saudi Arabia and different OPEC+ members are placing upward stress on crude oil costs (the largest part of the gasoline worth). Manufacturing cuts by OPEC+ members in April didn’t have an effect on crude oil costs a lot as a result of issues about slowing financial progress drove expectations that crude oil demand would stay regular or decline. This time, successive rounds of reduce bulletins starting in June and up to date knowledge exhibiting enhancing financial circumstances in the US are elevating the worth of crude oil.
Forward of this Labor Day, Hurricane Idalia is affecting U.S. Gulf Coast manufacturing and pipeline amenities. Hurricane-induced facility closures can have unsure results on the retail worth of gasoline, and the scale of the influence pertains to the length and severity of the closures.
Restricted gasoline provides have additionally contributed to greater gasoline costs. Refinery outages brought on by excessive climate and refinery upkeep initially scheduled for final yr have stored U.S. gasoline inventories under the earlier five-year common since March 2022. Most just lately, we anticipate deliberate upkeep for Irving Oil’s refinery (320,000 barrels per day (b/d)) in Saint John, New Brunswick, and Monroe Power’s refinery (185,000 b/d) in Coach, Pennsylvania, which is able to run from mid-September to mid-November, to maintain gasoline provides restricted, particularly within the Northeast. The East Coast is the highest-consuming gasoline market in the US, however it has comparatively little refinery capability.
U.S. gasoline costs fluctuate regionally, reflecting native provide and demand circumstances, completely different gasoline specs required by state legal guidelines, and taxes. Regional gasoline costs are often the best on the West Coast as a result of area’s restricted connections with different main refining facilities (together with the Gulf Coast), tight native provide and demand circumstances, and necessities for gasoline specs that make gasoline extra pricey to fabricate. West Coast costs as of August 28 had been $4.88/gal, up 2%, or 10 cents/gal, from the identical time final yr. The Rocky Mountains area faces related logistical constraints because the West Coast, though total provide and demand within the area are each decrease. Rocky Mountain gasoline retail costs averaged $3.98/gal, a 1%, or 4 cents/gal, lower over 2022.
The Gulf Coast accounted for 54% of the nation’s complete refining capability as of January 2023, and it produces extra gasoline than it consumes. In consequence, the worth of gasoline on the Gulf Coast is commonly the bottom in the US. On August 28, the common retail gasoline worth for the Gulf Coast was $3.38/gal, up 1%, or 2 cents, from the identical time final yr.
On the East Coast, retail gasoline costs had been $3.64/gal on August 28, down 1%, or 4 cents, in contrast with the identical time final yr. Midwest costs decreased 1%, or 4 cents, to $3.68/gal.
Principal contributor: Alex de Keyserling
Article by way of U.S. EIA’s At present In Power weblog.
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