LITTLE ROCK — Drivers in the U.S. should expect to see a “modest further increase” in gasoline prices as refinery repairs cut supply and plants begin making more expensive summer-grade fuels, a government report shows.
Retail gasoline, already at a record level for this time of year, hasn’t yet caught up with a surge in wholesale prices in 2013, the Energy Information Administration, the Energy Department’s statistical arm, said on its website late Thursday. Gasoline at the pump has climbed 45 cents a gallon since the beginning of the year, the agency said.
“Despite the significant rise in retail gasoline prices since the start of the year, a part of the even steeper rise in wholesale prices has not been fully reflected in pump prices,” the agency said in its “This Week in Petroleum” report.
Retail prices jumped 3.8 percent this week to $3.747 a gallon, according to Energy Information Administration data. Scheduled and unplanned refinery shutdowns across the country, coupled with the seasonal switch in fuel specifications, triggered a surge in wholesale prices.
On the U.S. East Coast, Delta’s Trainer refinery and Philadelphia Energy Solutions’ Philadelphia plant both shut equipment for repairs. Shutdowns in Venezuela as well as a shutdown at North Atlantic Refining Ltd.’s Come by Chance refinery in Canada also have supported gasoline crack spreads in the region, the Energy Information Administration said. A crack spread is the difference between the cost of crude oil and the price of a refined petroleum product such as gasoline, according to the Business Insider website.
Plant shutdowns on the U.S. West Coast have been “particularly heavy,” with more than 300,000 barrels a day of fluid catalytic cracking capacity offline at one point in January, the agency said. Fluid catalytic cracking refers to a refining process that produces gasoline and heating oil.
“While some capacity has come back online, several outages persist in the region,” the Energy Information Administration said.
Even as refineries restore production over the next several weeks, new supplies will be countered by a typical increase in demand at the beginning of spring and short-term gasoline prices will remain “volatile” and sensitive to unplanned refinery upgrades, the Energy Information Administration said.
“Gasoline prices also will be affected by the transition to summer-grade gasoline, which is more expensive to produce than winter-grade gasoline,” the report said.
Gasoline futures have surged 9.1 percent so far this year and reached $3.3145 a gallon on Feb. 15, the highest settlement since Sept. 28.
Supplies sank 2.88 million barrels to 230.4 million last week, the Energy Information Administration reported Thursday. Crude stockpiles increased by 4.1 million barrels to 376.4 million in the same report, the longest streak of increases since May. A barrel contains 42 gallons.
Retail gasoline, averaged nationwide, rose to $3.781 a gallon Friday, the highest level since October, AAA said on its website. The pump price has advanced 48.9 cents since it last declined on Jan. 16. In Arkansas, the average price on Friday was$3.651 a gallon.
Andy Lipow, president of Lipow Oil Associates LP in Houston, told Bloomberg Television on Thursday that he expected the streak of rising retail gasoline prices to be broken over the next two to three weeks.
“I expect when the refineries return from their maintenance season over the next couple weeks, this huge amount of the crude oil surplus is going be translated into gasoline and diesel fuel, pressuring prices,” he said in a television interview from Houston.
The average retail price in the U.S. will peak around $3.82 a gallon this year and won’t rise above $4 a gallon unless there’s an upheaval in the Middle East, Lipow said.
Business, Pages 27 on 02/23/2013