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The highest refining margins since 2015 as U.S. gasoline prices rise are a great incentive to American refiners to increase gasoline production, according to Reuters columnist John Kemp.
In the aftermath of the cyberattack on Colonial Pipeline, the national average U.S. gasoline prices shot up to over $3 per gallon to a seven-year high amid shortages at the gas stations and panic buying.
The national average price is expected to fall back slightly below $3 per gallon on Memorial Day, GasBuddy said this week. With more people vaccinated and the economy opening, 57 percent of Americans plan to take at least one road trip this summer, considerably higher than 31 percent who traveled in 2020, GasBuddy’s annual summer travel survey showed. The biggest roadblock to travel this year will be high gasoline prices, expected at $2.98 per gallon on Memorial Day, which would be a $1.02 increase over the same holiday weekend last year, and the highest on Memorial Day since 2014 when the price hit $3.66.
The highest national average gasoline prices in more than six years have driven up the gross margin for gasoline production from U.S. crude to over $24 per barrel, which is up from $10 in early 2021 and the highest level since 2015, Reuters’ Kemp notes.
As a result, U.S. crude oil refinery inputs averaged 15.1 million barrels per day during the week ending May 14, 2021, which was 96,000 barrels per day more than the previous week’s average, the EIA said in its weekly inventory report. Refineries operated at 86.3 percent of their capacity last week, up from 86.1 percent in the previous week, and up from just 69.4 percent utilization in the same week a year ago.
In gasoline, the EIA reported in its weekly estimate an inventory decline of 2 million barrels for last week, which compared with a build of 400,000 barrels a week earlier. Gasoline production last week averaged 9.8 million bpd, up from 9.6 million bpd a week earlier.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.