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Gasoline prices hit $6 in parts of the U.S. and summer driving isn’t here yet

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Los Angeles station, California petrol price reached over $6 per gallon on February 23, 2022.

Frederic J. Brown | AFP | Getty Images

Although gas prices fluctuate, they are expected to rise sporadically. More drivers will likely pay more than $5 for gasoline and $6 for unleaded during peak summer driving seasons.

On Thursday, the national average price for unleaded gasoline was $4.23 per g. That’s five cents more than one week before and 10c less than its recent record high. AAA.However, analysts believe that the rise in gasoline prices will cause prices to go up even more due to rising oil prices this week as well as the increasing price of gas in the futures.

John Kilduff of Again Capital said, “I believe $5 could be easily achieved here if it continues todeteriorate.” California: I have seen $7 at certain stations.

Californian drivers are the hardest hit. They pay an average of $5.88 for a gallon of unleaded in California, partly due to higher taxes and the special blend of West Coast fuels. According to AAALos Angeles drivers are paying $6.03 an gallon on average. Nevada’s average price is $5.17/gallon while Washington State’s average cost is $4.72/gallon.

Prices in the Midwest, South, and the Midwest are the lowest, except for Illinois which is $4.49. AAA reports that the average gallon price in Texas and Iowa is $3.88, while Ohio and Georgia go for $3.99.

Some states are looking to reduce gas taxes, or have already done so. Connecticut plans to put a three-month moratoriumOn April 1, the 25c per gallon gasoline tax will be in effect

Maryland last week suspendedThere is a 36c per gallon gasoline tax. The average pump price of unleaded fuel at this station is $3.79, which is far lower than the neighboring Pennsylvania $4.31/gallon. a state with a high gas tax. Georgia also suspending its gasoline tax.

Legislation has been proposed by Democrats in the U.S. Senate and HouseTo temporarily suspend the federal 18.4 cent per gallon gas tax These proposals were referred to the committees.

Can prices get so high?

Prices for gasoline have dropped from record levels of $4.33/gallon on March 11, when they were unleaded at $4.33. While gasoline prices fell as oil prices dropped, crude prices have moved up again. Analysts believe that gasoline prices may also fall.

It is difficult to predict how high pump prices can rise, especially during peak summer driving seasons between Memorial Day weekend and Fourth of July. Analysts believe that this will be dependent on oil prices which fluctuate as the world tries to replace Russian oil exports.

Tom Kloza from OPIS, the global head of energy analytics said that “the truth is, I have no idea.” On the West Coast, I believe prices might reach $6 per gallon. For the rest of the nation, I believe I am in the $4.25- $4.75 range.

There are gaps in the refining process

Kloza indicated that the year ahead is one of a gap for the global refinery industry. There are lost capacities and plans to add more refining operations.

He said that North America has about 1.2million barrels per day more refining capacity than it did in the early 2020 pandemic.

“Refineries such as those in California, North Dakota and Wyoming are among those being reused or working towards making renewable diesel for aviation fuel,” said he. Also, capacity was lost. Shell closed a refinery in Convent, LouisianaAnd Phillips 66 turned its Alliance refineryHe said that he moved the contents of a Louisiana storage unit into another after Hurricane Ida damaged it.

Kloza announced that there will be new refinery capacity in Southeast Asia, Nigeria and the Middle East.

He wrote that the refineries are designed to maximise the yields from the middle barrel of refined oil and can produce large quantities of jet fuel and diesel. The rest of 2022, and the early parts of 2023, will depend on the existing global capacity against the background of the greatest uncertainty in crude oil supply history since the 1970s.

Analysts believe that crude oil could drop sharply if there is an end to the conflict in Ukraine. However, the future of the market remains uncertain. For the moment, Russian oil exports are estimated at 2 million-3 million barrels per daily. Russia exported 2.5 million barrels per hour of refined products, primarily to Europe. Some of this supply has been replenished by the rest of the world.

Kloza stated that for every 10 cent increase in oil prices per barrel, gasoline prices usually rise 24c a gallon.

Although gasoline supplies in the United States are somewhat lower than normal, refiners run at 91% capacity and should be capable of providing enough gasoline to satisfy demand.

The national average for diesel fuel was $5.05 per g on Thursday. Analysts believe that the market is more tightly supplied and that if refiners have more diesel production capacity, this could increase gasoline prices.

U.S. has been a net exporter for refined fuels. It exported about 1 million barrels per day last week. However, 268,000 barrels of gasoline are imported daily by the U.S. according to the U.S. Energy Information Administration.

Kilduff stated that the United States could suspend its requirement for summer fuels to avoid any shortages over the coming months. Refineries are typically temporarily shut down at this point in the year, to allow them to prepare for the switch to better-suited fuels for warmer temperatures.

He stated, “Waving the patchwork environmental regulations to summer gasoline would greatly lower prices at the pump as well as assist consumers.”

Kloza reported that gasoline retailers don’t make more profit than consumers, despite the fact that they are closely watching rising gas prices.

Kloza explained that “the margin at present for the typical 50-state retailer is 33.4 Cents per gallon. This is exactly the same as it has been over the last few decades.”

Prices fluctuate

The drivers are seeing large discrepancies among gasoline prices between states, as well as from station to station within their neighborhoods.

Sal Risalvato, executive director of the New Jersey Gasoline, Convenience Store, Automotive Association, said one reason is that gasoline prices have been fluctuating and moving quickly — so quickly that his association’s 1,000 members are having trouble keeping up with price changes.

“I’ve been monitoring the wholesale prices. You can see the wholesale prices fluctuating between 20c and 15c each day. Then they go up again, but then fall back by twenty cents. He said, “It’s been an absolute rollercoaster.” It’s almost like the lottery winning a gas delivery when you are down.

Volatility in oil prices is the reason for fluctuating pump prices. West Texas Intermediate crude oil futures fell Thursday on concerns that Iran might reach an agreement to allow Iran oil exports in exchange for a nuclear deal.

Prices rose on Wednesday after reports surfaced that the Caspian pipeline Consortium terminal at the Black Sea sustained storm damage, and that loadings of over 1,000,000 barrels per day of Kazakh oil and Russian oil had halted.

West Texas Intermediate crudeIt traded at $112.40/barrel on Thursday, close to its previous high of $130.50/barrel. WTI traded in wide swings, with WTI falling to below $95 per barrel last week.

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