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Seasonal factors contribute to rising gasoline prices

Hydrocarbon Engineering,


The US average retail price of regular gasoline was US$ 3.68/gal. on 21 April 2014. This represents a 39 cent/gal. rise a low in early February. The US Energy Information Administration (EIA) has attributed the recent rise in retail price to an increase in crack spreads (the difference between the wholesale price of gasoline and the price of crude oil).

Increases in crack spreads are the result of typical seasonal factors such as refinery maintenance, higher travel related demand as the driving season begins and the switch to summer grade gasoline, which is more costly than winter grade gasoline.

In 2014, the average crack spread has been close to the five year average average for the first four months of the year. However, the 2014 seasonal increase has been slightly steeper than usual. The EIA has suggested that this stems partially from lower than normal crack spreads in January and February; 12 cents/gal., 5 cents lower than the five year average. The low spreads in the first two months of the year were likely related to reduced driving as a result of severe winter weather in many parts of the country.

Crack spreads have now risen to an April average of 44 cents/gal., 11 cents/gal. higher than the five year average for the month. According to the EIA, this year’s increase is the result of demand outpacing supply, as refineries are down for maintenance and driving ramps up towards the summer.

Additionally, data in late 2013 seems to indicate that gasoline demand is beginning to recover due to improving employment conditions and higher economic growth. The EIA has highlighted current inventory as evidence of this trend. Having reached 235.3 million bbl on 17 January (8.2 million bbl above the five year average for that week), total US gasoline inventories have since fallen to 210.0 million bbl, 6.0 million bbl below below the five year average.

For more on gasoline and diesel price trends, see also ‘US gasoline and diesel prices rises’.


Adapted from a press release by Emma McAleavey.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/24042014/gasoline_price_increases_seasonal_factors_414/

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