US gasoline prices at a year high due to tight supply affecting motorists.
US gasoline prices at a year high due to tight supply affecting motorists.
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U.S. Motorists Enjoying One Last Trip Before School Begins as Pump Prices Surge
As the Memorial Day holiday approaches and the school year comes to an end, many American motorists are squeezing in one final road trip. However, this year, they are faced with the highest pump prices they have experienced so far. The national average retail price of gasoline has reached $3.86 per gallon, a 7% increase from just a month ago. In California and Washington, prices have soared above $5 a gallon. These steep costs are mainly due to strong demand and a series of refinery outages, causing tighter gasoline supplies.
Typically, as peak vacation travel subsides, consumers can expect a reprieve from rising fuel costs. However, this year’s scenario is different. Analysts at Goldman Sachs predict that national retail gasoline prices will average $3.90 a gallon this month. This increase in prices has caught many motorists off guard, particularly considering that prices last summer were hovering around $5 a gallon. Martin Jones, a vacationer from Massachusetts, expressed relief that current prices are not as high. He emphasized how this allows him to continue taking long drives during his sightseeing adventures.
One factor contributing to the recent surge in prices is earlier-than-expected maintenance at a BP refinery in Whiting, Indiana, which caused retail prices in the U.S. Midwest to jump as much as 21 cents a gallon in Ohio and 16 cents in Michigan during the last week. Additionally, Irving Oil’s 320,000-barrel-per-day oil refinery in New Brunswick, Canada, and Delta’s 185,000-barrel-per-day refinery in Trainer, Pennsylvania, will be offline for a significant portion of September and October. These prolonged maintenance periods will impact approximately 9% of the product supplied in their respective regions.
“It is fairly abnormal to see prices going up” at this time of the year, said Patrick De Haan, head of petroleum analysis at price tracker GasBuddy.com. “We tend to see prices declining going into the fall.” This unexpected increase in prices can be attributed to weekly U.S. gasoline stockpiles remaining below the five-year average throughout this year. As a result, any disruptions in refining capacity can lead to price spikes. Recent U.S. government data shows a fifth decline in six weeks, with total U.S. gasoline stocks dropping to 216.4 million barrels.
In addition to refinery outages, another factor contributing to the current situation is the record heat levels experienced in Texas. Goldman Sachs noted a likely 2% decline in U.S. refiners’ product yields over the past few weeks due to the intense heat. Small changes in yield can result in a significant decline in product availability. With peak hurricane season still ahead, the U.S. National Oceanic and Atmospheric Administration (NOAA) recently raised its outlook for storms, partly due to record warm sea surface temperatures. These hurricanes have the potential to cause damage or closures of U.S. oil refineries, especially those along the Gulf Coast.
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Despite the current challenges, motorists are determined to make the most of their trips. Pump prices may be high, but the opportunity to embark on summer adventures and create lasting memories outweighs the temporary financial setback. As travelers fill up their tanks and hit the road, they are embracing the opportunity to explore new destinations and enjoy the last moments of summer.
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