The long, hard winter in the United States has kept demand for gasoline lower than usual, though drivers have still seen an increase in price nearly every day for more than a month. The seasonal increase in retail gasoline prices in the United States, however, may be coming to an end as refineries wrap up their maintenance activities, AAA says.
AAA spokesman Michael Green told Oilprice refinery maintenance and the switch to the summer blend of gasoline is responsible for the increase, which amounts to 25 cents per gallon over the course of 38 days.
AAA reported a national average retail price of regular unleaded gasoline Monday of $3.52 per gallon. That’s nearly 6 percent higher than one month ago, though still 17 cents below the national average from the same time last year.
California's early switch to the summer blend of gasoline is in part responsible for its higher-than-average gasoline price. The state average Monday was $3.96 per gallon, though no state in the Lower 48 reported an average price above the $4 mark.
Last week, PBF Energy reported a small fire disrupted operations at its refinery near Delaware City, which can refine more than 190,000 barrels of crude oil per day. Green said prices in the Great Lakes region, particularly in the band stretching from Illinois to New York, have jumped because of refinery issues and disruptions. Meanwhile, the national average price Monday was the highest it's been since Sept. 15, though the seasonal spike was tempered because severe winter kept many drivers at home.
Green said prices could peak as high as $3.75 per gallon this spring, but the refinery maintenance period is drawing to a close.
"Most refineries schedule their maintenance to be completed by summer so that they can take advantage of strong demand during that time," he said. "While many consumers can expect to see slowly rising prices this month, the springtime peak may be in sight."
Global energy markets may be in a rough ride this week amid ongoing tensions in Eastern Europe and military action involving Libyan crude oil.
U.S. President Barack Obama issued sanctions Monday against Russian officials for deploying troops to Crimea, which voted Sunday to tilt toward the Kremlin. The AAA spokesman said all eyes will be watching to see if sanctions effect Russian petroleum production and exports, as Russia is one of the largest oil producers in the world.
Meanwhile, Pentagon spokesman John Kirby said Monday a team of U.S. Navy SEALs seized oil tanker Morning Glory in international waters. Morning Glory, a North Korea-flagged vessel, took on a cargo of oil owned by the Libyan National Oil Co., which Kirby said was "illicitly obtained" from a port under rebel control in eastern Libya last week.
Nevertheless, crude oil prices fell Monday following last week's drop off that coincided with the test sale from the Strategic Petroleum Reserve. Few traders were placing bets on an increase this week.
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Green said once the refinery maintenance season ends, gasoline production and supply will work in consumer's favor. He said AAA expects the national average to settle around $3.35 by early summer.
By. Daniel J. Graeber of Oilprice.com
