U.S. drivers should expect to see a “modest further increase” in gasoline prices at the pump as refinery outages cut supply and plants begin making more expensive summer-grade fuels, a government report says.
Retail gasoline, already at a record level for this time of year, hasn’t yet caught up with a steep rise in wholesale prices in 2013, the Energy Information Administration, the Energy Department’s statistical arm, said on its website late Thursday. Gasoline at the pump has climbed 45 cents a gallon since the beginning of the year, the agency said.
“Despite the significant rise in retail gasoline prices since the start of the year, a part of the even steeper rise in wholesale prices has not been fully reflected in pump prices,” the agency said in its “This Week in Petroleum” report.
Retail prices jumped 3.8 percent this week to $3.747 a gallon, according to EIA data. Scheduled and unplanned refinery shutdowns across the country, coupled with the seasonal switch in fuel specifications, triggered a surge in wholesale prices.
On the East Coast, Delta’s Trainer refinery and Philadelphia Energy Solutions’ Philadelphia plant both shut equipment for repairs. Outages in Venezuela as well as a shutdown at North Atlantic Refining Ltd.’s Come by Chance refinery in Canada have also supported gasoline crack spreads in the region, the EIA said.
Plant shutdowns on the West Coast have been “particularly heavy,” with more than 300,000 barrels a day of fluid catalytic cracking capacity offline at one point in January, the agency said.
“While some capacity has come back online, several outages persist in the region,” the EIA said.
Even as refineries restore production over the next several weeks, new supplies will be countered by a typical increase in demand at the beginning of spring and short-term gasoline prices will remain “volatile” and sensitive to unplanned outages, the EIA said.
“Gasoline prices will also be affected by the transition to summer-grade gasoline, which is more expensive to produce than winter-grade gasoline,” the report said.
Gasoline futures for March delivery slid for a third day on the New York Mercantile Exchange Thursday to $3.0365 a gallon, the longest streak of declines since December. Futures have surged 9.6 percent so far this year and reached $3.3145 a gallon on Feb. 15, the highest settlement since Sept. 28.
Supplies sank 2.88 million barrels to 230.4 million last week, the EIA reported, more than double the forecast drop of 900,000 barrels in a Bloomberg survey of analysts. Crude stockpiles increased by 4.1 million barrels to 376.4 million in the same report, the longest streak of increases since May.
Retail gasoline, averaged nationwide, rose 0.3 cent to $3.781 a gallon yesterday, the highest level since October, AAA said on its website. The pump price has advanced 48.9 cents since it last declined on Jan. 16.
Andy Lipow, president of Lipow Oil Associates in Houston, told Bloomberg Television Thursday he expected the streak of rising retail gasoline prices be broken over the next two to three days.
“I expect when the refineries return from their maintenance season over the next couple weeks, this huge amount of the crude oil surplus is going be translated into gasoline and diesel fuel, pressuring prices,” he said in a television interview from Houston.
(c) 2013, Bloomberg News.