By Brian L. Milne, Refined Fuels Editor for DTN
Nationally, retail gasoline prices at major metropolitan markets will edge higher this week on mostly modest increases in wholesale markets.
In the lower Northeast however, prices at the pump are expected to see sharper increases following greater pass through costs due to an outage at an oil refinery in New Jersey.
In early April, a fire shut a crude processing unit at the Bayway refinery that’s operated by ConocoPhillips. The lost gasoline production reduced supply for the region which led to price gains in the wholesale markets from N.J. north to Boston.
Price gains for gasoline in the Northeast have been limited because of a high level of imports originating in Europe, with those imports primarily received in the New York Harbor. In Europe, diesel is the fuel of choice, with the continent increasing the share of diesel consumed at the expense of gasoline.
However, European refiners still produce gasoline when making diesel fuel, so look to the US to send those extra barrels.
The gasoline import rate from Europe is expected to decline through mid to late May however, as refiners across the Atlantic reduce operating rates at refineries there for maintenance.
Interestingly, while this should support gasoline prices in the Northeast over the short-term, it will likely pressure wholesale diesel fuel values, with US refiners typically sending diesel fuel back to Europe on the ships that had carried in the gasoline supply. Shippers do not like to send tankers across the ocean empty.
Higher Prices Expected for Summer
In its seasonal outlook, the Energy Information Administration, which is the statistical arm of the Department of Energy, said mid-April it expects the national average price for retail gasoline this summer to be $2.23 gallon. They define the summer period as April 1 through Sept. 30.
View DTN’s Weekly and Historical Gas Prices
The projected summer average compares with a US retail average at $2.051 gallon in mid-April, so consumers should expect the trend higher in pump prices to continue. However, retail prices will not go up in a straight line, and selling pressure in wholesale markets in the latter part of April could delay the advance.
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].