Refineries are struggling to ramp up production ahead of the summer driving season.
VIDEO: Limited Supply Leaves Consumers Paying More At The Pump
As gasoline prices continue to rise, refineries along the U.S. Gulf Coast are still playing catch-up and demand is surging, suggesting there’s little relief at the pump for consumers, analysts said.
Automotive club AAA put the average retail price for regular unleaded gasoline at $2.88 per gallon for March 16, a 3 percent increase from the price this time last week. A year ago, the average retail price was closer to $2.30 per gallon.
Patrick DeHaan, a senior petroleum analyst at GasBuddy, told Zenger News the recent dip in the price of oil, which accounts for the bulk of the price at the pump, won’t do much to help consumer prices.
“On my side, everything looks pretty bullish,” he said from Chicago. “Gasoline is 13 cents per gallon away from $3 per gallon, and it’s only March. The recovery is still not near maturity, we have room to run, which my wallet hates, but that’s the reality.”
Californian drivers saw the price of gas jump again, up about 2.5 percent from last week to hit $3.86 per gallon. Because of higher state taxes, California almost always has the highest gas prices in the continental United States.
Closer to the dense network of refineries along the Gulf Coast, Mississippi usually enjoys the lowest price for gas. At $2.58 per gallon, drivers there saw the price increase 4.5 percent from last week.
Matthew Kohlman, an associate editorial director for clean product analysis at S&P Global Platts, said from Houston that Gulf Coast refineries were still struggling to return to service following last month’s deep freeze in Texas.
“They are hampered by pipe leaks, boiler problems and other issues on equipment not designed for extreme cold,” he told Zenger.
Refinery capacity to churn out petroleum products like gasoline and diesel is recovering, but still far below what’s needed this close to the start of the summer driving season, which unofficially kicks off in May. That limited supply has pushed gasoline prices to multiyear highs, Kohlman said.
Refineries in late spring start making a type of gasoline that evaporates less in the warmer summer months for the Northern Hemisphere. It’s more expensive than the winter blend and that could add more financial pain to consumers, though a new round of stimulus checks could help offset the impact.
Denton Cinquegrana, the chief oil analyst at the Oil Price Information Service, said from New York that consumer gasoline prices by his watch have edged lower just three times so far this year. And though oil prices are moving away from recent highs, it looks like there’s no relief in sight.
“I don’t think the bulls are ready to throw in the towel just yet,” he said.
(Edited by Bryan Wilkes and Kristen Butler)