Following weeks of steady pump price declines, gas prices are starting to increase across the country, according to AAA.
On the week, a gallon of regular unleaded is, on average, a nickel more expensive with nearly 25 states seeing an increase of a nickel or more since last Monday.
“For the more than 41 million motorists hitting the road this week to celebrate the Independence Day holiday, they will find gas prices cheaper than Memorial Day weekend, but more expensive than they’ve been paying the last few weeks,” said Tammy Arnette, Senior Public Affairs Specialist for AAA. “It’s typical to see increases at the pump ahead of the holiday, but we may see prices continue to jump throughout the month due to refinery interruptions on the East Coast, increasing demand and fluctuations in crude oil price.”
Factors driving up gas prices:
- Crude oil prices: West Texas Intermediate (WTI) was priced as low as $51.13 in mid-June, but has since jumped more than $8 to land as high as $59.43. Crude accounts for as much as 60% of the retail gasoline price.
- Supply: The Energy Information Administration (EIA) reports total U.S. stocks at 232 million bbl for the week ending June 21, which is the lowest June stock level seen since 2015.
- Demand: Demand remains robust for peak summer driving season at a four-week average of 9.6 million b/d. EIA reports gasoline stocks drew down for a second week in its latest report. This trend isn’t likely to stop this week, especially with 41.4 million Americans expected to hit the road for the Independence Day holiday.
- Philadelphia Energy Solutions (PES): Last week, PES announced that they will permanently close the South Philadelphia refinery this month, which is the oldest and largest refinery on the East Coast. The announcement came following a June fire and explosion at the refinery, which produces 335,000 barrels of crude per day (42 U.S. gallons per barrel). While gasoline stocks from Canada, neighboring refineries, and the Colonial Pipeline will help backfill supply, retailers will likely face increased transportation costs which will drive up prices in the Northeast and surrounding regions.
- Organization of the Petroleum Exporting Countries (OPEC): OPEC and its partners will meet today and tomorrow in Vienna and are likely to extend the current production reduction agreement of 1.2 million b/d through the end of the year, which could push crude oil prices more expensive.
Today’s national average is $2.71, which is a nickel more than last week, but 11 cents less than last month and 14 cents cheaper than a year ago.
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Chris Graham
