By Brian L. Milne, Refined Fuels Editor for DTN
Gasoline prices will edge higher at most retail locations in major metropolitan regions in the U.S. through mid-April following an increase in costs passed through from wholesale markets earlier in the month.
The change in pump prices will be mixed, depending on regional supply factors.
Retail gasoline prices are expected to continue higher through the spring, which is typical as refiners undergo their heaviest maintenance of the year during April and May. However, lower demand and ample supply levels are projected to keep the pace of the increase slower than what was experienced in the past few years.
Two other factors, increased gasoline imports and a greater amount of ethanol being blended into U.S. gasoline supply are expected to limit the increase in gasoline prices in the run-up to the summer months.
Gasoline prices are determined by raw material or feedstock costs, which is mostly crude oil. This season, the cost of crude oil will be the leading driver in the change at the pump for gasoline. In February, crude costs made up 47% of the price of gasoline. Additional costs components include refining, distribution, marketing and taxes.
Currently, the primary benchmark for U.S. crude oil has been fluctuating in a wide $45 to $55 barrel range, climbing above $50 barrel in mid-March for the first time since early January.
Expectations are crude will maintain that trade range through the spring which would, in turn, limit the upturn in gasoline prices. Should crude climb above $55 barrel, some observers point to $70 barrel as the next upside price point which, in turn, would lift gasoline prices by 35 to 45 cents a gallon from current levels.
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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].
