Why Gasoline Prices Are Rising Today

Refining margins in the United States hit $42.41 per barrel on Tuesday, more than double the five-year average for this time of the year, as refinery maintenance and unplanned outages reduce capacity while the global fuel market is tightening with the Chinese reopening and the looming EU ban of Russian fuel imports by sea.   

The crack spread hit $42.41 per barrel this week, compared to a five-year average for January at $15.56, according to a Reuters analysis of dta from Refinitiv Eikon.

The tightening global fuel market coincides with some refineries still recovering from the Winter Storm Elliott at the end of December—on Christmas Eve, as much as 1.5 million barrels per day (bpd) of the U.S. Gulf Coast’s refining capacity was shut down due to the freezing temperatures.

Additionally, refiners plan longer maintenance periods early this year after foregoing or doing just basic maintenance at refineries for a few seasons. First, it was COVID that prevented workers from being sent to refineries for maintenance. Then it was the rebound in demand – especially in 2022 – during which refineries ran at near capacity to meet consumption. So this refinery maintenance season is expected to be longer and involve a higher number of refineries across the U.S., temporarily driving operational capacity lower and fuel prices higher

Gasoline prices in the United States have risen in recent days. Drivers appeared to have the advantage of the recent milder weather in much of the United States by fueling up and hitting the road, AAA said on Monday.

“The increase in gasoline demand and slightly more expensive oil pushed the national average for a gallon of gas higher by 12 cents since last week to $3.42.” “And with the cost of oil hitting $80 a barrel, there is a lot of upward pressure on gas prices at the moment,” said AAA spokesperson Andrew Gross.

The national average gas price rose last week for the fourth straight week, Patrick De Haan, head of petroleum analysis at fuel-saving app GasBuddy, said on Monday.

The Monday national average of $3.39/gal is now 30.2 cents higher than a month ago and 7.2 cents higher than a year ago, he added.

source: https://oilprice.com/