By Brian Milne, Refined Fuels Editor, DTN
Retail gasoline prices in major metropolitan regions across the U.S. will be slightly mixed, but most local markets will see an increase during the second week of March.
Consumers in the West Coast could see more price relief as supply catches up with demand, although pump prices will remain above $2 gallon for California and the Pacific Northwest.
Wholesale gasoline prices started March higher, but the advance stalled in several major metropolitan markets. The national supply of gasoline entered March slightly higher, but regionally it was mixed.
Gasoline inventories increased in the Midwest and West Coast, and it was in the Pacific Northwest and Southwest and upper Midwest that we saw the price declines in wholesale markets that serve those regions.
Seasonally, gasoline prices trend higher to the July 4 holiday, as refinery operators idle units for maintenance in March and April and ahead of peak demand during the summer. Refineries in California typically perform their maintenance earlier in the year and begin restarting units now, which is what we’ve seen in 2009 and why supply is growing there.
The U.S. average for regular grade gasoline began March 2.5 cents higher at $1.934 per gallon, according to the Energy Information Administration (EIA).
Looking ahead, expectations continue for the national average to pop above $2 gallon before exiting March and advance from there. However, how far above $2 gallon remains an uncertainty due to conflicting lagging indicators.
The Department of Labor reported on March 6th an increase in the unemployment rate to 8.1% at the end of February as the recession deepened, and more job losses are expected. During difficult periods when unemployment increases, gasoline consumption usually declines as less people travel to and from work.
However, preliminary data released by the government showed gasoline demand for February 2.2 percent higher than year prior. Higher gasoline demand is linked to lower prices, so it could be consumers view retail prices averaging on either side of $2 gallon as a good deal.
This development will be closely watched by the market, with a reverse in the rising demand rate likely leading to price slippage at the pump.
About the Author
Brian L. Milne is the Refined Fuels Editor for DTN—a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for nearly 14 years as an analyst, journalist and editor. He can be reached at [email protected].