Gasoline Prices Up Sharply on Strong Demand

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For the second consecutive week, U.S. gasoline prices were higher Monday morning than they were in the prior week. And sharply higher too — the price of a gallon of regular gasoline cost on average about seven cents more Monday morning than it did last Monday.

The national average this morning was $2.53, up from $2.46 last week and nearly four cents a gallon higher than the month-ago price.

Gasoline inventories fell by 4 million barrels last week, according to U.S. Energy Information Administration (EIA) data. Crude oil inventories also dropped in the week ended October 27, and seasonal maintenance continues at some refineries.

Most significant may be continuing strong demand. Patrick DeHaan, head of petroleum analysis at GasBuddy, said:

It’s been a frenzied week at fuel pumps across the country, but without a hurricane driving up prices, many motorists have been dumbfounded about what’s taking place with the unseasonable upward trend. Such a strong weekly upward move is rare in the fall, but is explained by a confluence of factors, including oil prices hitting a new 2017 high, a major pipeline leak resulting in disruption, autumn refinery maintenance, but perhaps among the more surprising- robust demand for gasoline so late in the season. Such demand has magnified relatively mundane factors into a major gas price event for much of the United States and Canada. But some slowdown is expected in the Great Lakes, the region hardest hit with price spikes in the last week, as repairs [to the] Explorer Pipeline have been completed, but some additional bumps in the road ahead can be expected for motorists elsewhere.

States where prices moved most last week were: Ohio and Illinois (up 18 cents); Indiana and California (up 15 cents); Wisconsin (up 12 cents); Michigan (up nine cents); Missouri (up eight cents); Delaware and Iowa (up six cents); and Kentucky (up five cents). The sharp jump in California is most likely due to a 12-cent per gallon increase in state gasoline taxes.

States with the lowest average prices last week included Alabama ($2.21); Mississippi ($2.22); South Carolina ($2.24); Texas, Arkansas and Louisiana ($2.26); Tennessee ($2.27); Virginia ($2.30); and Oklahoma and Georgia ($2.33).

The highest average prices per gallon last week were reported from California ($3.21); Hawaii ($3.10); Alaska ($3.06); Washington ($2.91); Nevada ($2.81); Oregon and Pennsylvania ($2.75); Connecticut and Indiana ($2.72); and Illinois ($2.70).

West Texas Intermediate (WTI) crude oil for December delivery traded up nearly 2% Monday morning at $56.37, while Brent for January delivery traded at $63.62. The price differential (spread) between WTI and Brent crude is now more than $7 a barrel, indicating that WTI export quantities could remain at recent highs and perhaps go even higher, putting more upward pressure on U.S. pump prices.