Gasoline Prices Have Risen Since The Start of the Year

The average U.S. retail price for regular motor gasoline has risen 45 cents per gallon since the start of the year, reaching $3.75 per gallon on February 18. Between January 1 and February 19, the price of Brent crude, the waterborne light sweet crude grade that drives the wholesale price of gasoline sold in most U.S. regions, rose about $6 per barrel, or about 15 cents per gallon. A simple calculation, which modestly understates the role of higher crude prices to the extent that crude price increases during December 2012 were still not fully passed through in retail gasoline prices at the start of 2013, suggests that about two-thirds of the rise in gasoline prices since the start of the year reflects higher gasoline crack margins, the difference between the wholesale price of gasoline and the price of crude oil.

The major factors behind the increase in gasoline crack spreads are: planned and unplanned refinery maintenance; the low starting level for gasoline crack spreads going into 2013; preparation for seasonal fuel specification changes; and developments in global product demand that have affected domestic refinery utilization rates, maintenance needs, and product balances.

 

Throughout much of November and December 2012, gasoline crack spreads were very low, and in some cases negative (a barrel of gasoline worth LESS than a barrel of Brent crude). As a result, retail gasoline prices were lower than one would typically expect given prevailing crude oil prices, with the lowest price of 2012 reached in EIA's weekly survey on December 17. Since the beginning of 2013, reformulated gasoline blendstock for oxygenate blending (RBOB) crack spreads versus Brent have increased 12, 34, and 46 cents per gallon, respectively, in New York Harbor, the Gulf Coast, and Los Angeles.

Both planned and unplanned maintenance at several refineries have supported higher crack spreads. Many refineries schedule maintenance early in the year when gasoline demand is seasonally low.

The U.S. average retail price of regular gasoline increased 14 cents to $3.75 per gallon, up 16 cents from last year at this time. The national average price has seen double digit increases two out of the last three weeks and is up 45 cents since the beginning of the year. The largest increase came in the Midwest, where the price increased 18 cents to $3.76 per gallon. The Gulf Coast price is $3.53 per gallon, an increase of 15 cents from last week. The Rocky Mountain price is up 14 cents to $3.41 per gallon. On the West Coast, the price increased 11 cents, but remains just shy of the $4 per gallon mark at $3.97 per gallon. Rounding out the regions, the East Coast price saw the smallest increase, 10 cents, rising to $3.75 per gallon.

(DOE-EIA, Petroleum & Other Liquids, DOE-EIA)