Explainer: Why Are U.S. Fuel Prices Rising Again? Will They Keep Going Up?
10.10.2022 By TankTerminals.com - NEWS

October 10, 2022 [Reuters] – U.S. gasoline prices have been rising again, and many worry that costs at the pump will go up further after OPEC and its allies said Wednesday the group known as OPEC+ would cut its production target.


Still, the national average may not rise that much, and could even fall in coming weeks.

U.S. gasoline prices skyrocketed early this year due to high demand and tight global refining supplies, but they began to fall after peaking in June. Now, the national average is up 20 cents from its mid-September lows of $3.67 a gallon, largely driven by gains in the Midwest and West Coast, according to the American Automobile Association.


The Organization of the Petroleum Exporting Countries and allies, including Russia, will cut their production target by 2 million barrels a day. The actual output cut may be much lower, between 500,000 and 1 million barrels a day.

Prices rose prior to that news, though the outlook is unclear. If oil remains in the $90-per-barrel range, gasoline prices may not be overly affected.

Crude oil prices are “struggling here to log gains even less than one day after the OPEC decision,” said Robert Yawger, senior vice president in energy futures at Mizuho Americas.


Gasoline prices rose largely due to regional refinery outages in the west coast and the Midwest. In California, costs are up more than $1 per gallon in the last month whereas in Texas, prices remain lower than a month ago.

Refinery maintenance often takes place in the fall when demand drops after the summer driving season. This fall, however, some refineries had to shut units without warning due to infrastructure problems.

Three refineries in Washington state and California have had planned maintenance while another had an unplanned outage in September, according to Refinitiv data and refining sources. In the Midwest, BP-Cenovus’ Toledo refinery is still offline after a fatal explosion shut the plant late last month.

Overall, U.S. oil refiners were using 91% of their capacity as of last week, still seasonally high. Overall U.S. refining capacity has declined since the coronavirus pandemic crushed demand in early 2020.


One of the best indicators for retail costs is the price of wholesale gasoline futures. In the areas most hit by refining outages, those prices climbed to a record in late September but have dropped sharply in recent days. read more

Gasoline produced to meet California’s environmental rules has fallen $1 a gallon in Los Angeles and San Francisco wholesale markets in the past two weeks because of increasing supply, traders said.

That should cause prices to start to drop before long in California, where the retail cost is a nation-high $6.42 a gallon, said Patrick De Haan, head of petroleum analysis at GasBuddy.com.

“Wholesale prices had skyrocketed in the West Coast and Great Lakes. They’re starting to come back down now,” he said. “There’s going to be some significant relief coming for California so long as there are no new refinery outages.”

The nationwide average could keep edging up, analysts said, as refining activity in the Midwest and West Coast is offset by OPEC’s decision to lower output. However, De Haan said prices could be lower in a few weeks.


Tight refining supply has caused the gap between wholesale gasoline futures and retail prices to remain wide. It currently sits at about $1.20 a gallon, much more than the average of 88 cents over the past five years.

U.S. retail gasoline demand was sluggish throughout the summer, but has improved in the last couple of weeks, according to federal data. That has kept a lid on inventories, with U.S. stocks of gasoline sitting at an eight-year low. Additional refining upsets could squeeze that inventory more, boosting prices.

Pro Trial: Access 10,390 Tank Terminal and Production Facilities

10,390 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data

Colonial Terminals Announces Acquisition of Buckeye’s Wilmington, NC Terminals
12.04.2023 - NEWS
9790December 4, 2023 [Savannah Community Headlines]- On December 1, 2023, Colonial Terminals, Inc... Read More
Investors flock to US Natural Gas ETF Despite Price Slump
12.04.2023 - NEWS
December 4, 2023 [Reuters]- Investors have been piling into an exchange-traded fund (ETF) designe... Read More
Dutch Fund Keeps Shell, BP in Portfolio as it Dumps 40 Other Oil Firms
12.04.2023 - NEWS
December 4, 2023 [Oil Price]- Dutch pension fund Pensioenfonds Metaal & Techniek (PMT) is div... Read More
Oman Announces Plans for Common Infrastructure for Green Hydrogen Liquefaction and Export
12.04.2023 - NEWS
December 4, 2023 [Zawya]- The Government of Oman, Hydrogen Oman (Hydrom), Port of Amsterdam, Zeni... Read More