By Laura Sanicola

(Reuters) – The retail gasoline price in the United States increased on Tuesday, breaking another record set in March. This was due to a global bottleneck in refineries that caused prices to soar ahead of peak driving season.

According to American Automobile Association data, the price for a gasoline retail gallon was now $4.374, higher than the $4.331 record.

Futures futures lost 7% since March 30 but gasoline futures rose 9.4% and reached a new record of $3.7590/gallon on Friday before falling on Monday.

Even though the United States, other countries and others have made efforts to increase global crude oil supply, refinery closings caused by both planned maintenance and unexpected problems have increased fuel prices. As demand rebounded from the pandemic, global fuel stocks are shrinking. The invasion of Ukraine, and the subsequent US sanctions against Russia by its allies, further tightened supplies.

Mike Jennings (chief executive officer of HF Sinclair Corp), stated that the world had lost 1.5 million barrels worth of refining capacity since the pandemic. He made these estimates in Monday’s earnings call.

Jennings stated, “That’s 2.5% world consumption…it is a large number.”

Refiners prioritise gasoline production in spring ahead of warm weather as driving increases. They have been increasing distillate production to satisfy demand for jet fuel in Europe, Latin America, and the United States in recent weeks as Western sanctions against Moscow reduced Russia’s exports.

Gary Cunningham (Director of Market Research at Tradition Energy) stated that the earnings calls for refineries talk about maintaining full steam. This will ensure that refinery utilization remains high through the year.

The record price of diesel fuel was $5.45/gallon at the pump last week.

Despite this, the fuel costs in America are still significantly lower than those in major countries like Japan, France and the UK. In these places, higher fuel taxes can increase fuel cost.

Patrick DeHaan of GasBuddy’s petroleum analysis said, “I don’t see this resolving themselves until 2023 at any earliest,”

Oil, which is the most expensive input for refiners has dropped nearly $20 since March’s highs. This was due to a combination of increased supplies from the U.S. Strategic Reserves and lower demand from China, as well as the release of many millions of crude oil barrels.

However, inventories of product are falling. The U.S. Energy Information Administration reports that gasoline inventories have fallen 3% over the past year to 228.6 millions barrels.

On Monday, the 3-2-1 crack spread (a measure of refining margins) reached $54.34, almost 150% more than a year ago.

Jennings indicated that he believes that prices for commodities and products will remain relatively stable if the economies are strong.

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