Gas Prices: AAA’s Fuel Gauge Report | July 22, 2013
(WASHINGTON, July 22, 2013) Today’s national average price for regular unleaded gasoline is $3.67 per gallon. This price is six cents more than a week ago, nine cents more than one month ago and 20 cents more than the same day last year. Today’s price is the third highest average on record for this calendar day. While it is just two cents less than the price in 2011 it is still nearly 40 cents below the all-time record for this date of $4.06 in 2008.
A decline of one one-hundredth of a penny on Saturday ended a streak of 12 straight overnight increases, during which time the national average had spiked 20 cents — the largest such increase since February. While the national price at the pump has now technically fallen for three straight days, it has dropped just fractions of a penny and likely represents a temporary respite rather than the start of a return to lower prices.
Unless you live in Colorado or Utah, you’re likely paying more today for gasoline than two weeks ago. If you live in parts of the Midwest, Northeast or Mid-Atlantic you may be paying significantly more, including three states where prices have spiked at least 30 cents: Minn. 31 cents, Ind. 32 cents and Mo. 33 cents. As discussed in this space last week, Midwestern motorists have faced historically volatile gas prices in recent months. Prices spiked in May and early June because of refinery maintenance, tumbled back to earth at the end of June as refineries resumed production, and have raced higher again in July amid new refinery issues, continued tight supplies and oil prices that are at their highest level in more than a year.
Prices in the Northeast and Mid-Atlantic were relatively stable this spring; however retail prices in ten states in these two regions (Del., Conn., Maine, N.J., N.H., Md., Mass., R.I., Penn. and N.Y.) have jumped by at least 20 cents in the last 14 days. This sharp increase has been attributed to production concerns, most notably due to operational issues at Irving’s Saint John Refinery in Canada, which have been a catalyst for sharply higher pump prices in recent weeks. While not yet confirmed, market analysts believe that the Irving refinery is unlikely to return to full production until after the conclusion of the summer driving season in early September, which would be expected to keep upward pressure on prices.
As noted, higher crude oil prices have meant a rising tide for gasoline prices across the country. Entering July, West Texas Intermediate (WTI) crude oil had not settled above the $100 per barrel threshold for more than a year. That streak ended on July 3 and WTI has settled above $100 each trading day since, including a 16-month high of $108.05 per barrel last Friday. Continued unrest in Egypt has contributed to higher crude oil prices globally, but the increase in WTI (the traditional U.S. benchmark) has dramatically outpaced Brent crude (the traditional European benchmark) in recent months.
Prior to 2011, a difference or “spread” of more than a few dollars between the prices of these two products would have been major news. Beginning in 2011 this spread ballooned as increased crude oil production in the northern U.S. and Canada, combined with insufficient infrastructure to move this product from its delivery point in Cushing, Okla. to the coast, and led to a backlog of crude oil in the Midcontinent that was relatively insulated from the global geopolitical issues that sent Brent prices dramatically higher in recent years. A barrel of Brent was priced as much as $20 above a barrel of WTI as recently as February, but this spread has narrowed to near parity in recent weeks. While a number of factors have contributed to this closing price gap, many point to the increased capacity to bring crude oil from the Midcontinent to the Gulf Coast, most notably the mid-May reversal of the Seaway pipeline, which is now bringing 400,000 barrels per day of crude oil from Cushing to refineries on the Gulf Coast where they can be sold at global prices.
At the close of formal trading on the NYMEX, WTI settled down $1.14 at $106.91 per barrel, which is slightly more than a dollar below the settlement price for Brent.