The cost of a gallon of gas continued its unrelenting march to $4.00 per gallon this week as the average cost for a gallon of regular unleaded fuel reached $3.75, up an average of 11¢ per gallon for each of the past two weeks. The price of a gallon of gas has gone up about 50¢ since Christmas Day, less than two months ago, making the average cost of a fill up about $8.00 more expensive for the average U.S. driver. The price is based on a 16-gallon tank filled from near empty. The price of fuel is detailed in this week’s survey from the Energy Information Administration, a branch of the U.S. Department of Energy.
While the cost of gasoline rises, the cost of diesel fuel has also continued to go up week after week since the start of the year. The average price of a gallon of diesel fuel topped out at $4.33 per gallon, for truckers and diesel car owners driving in New England this week. For the U.S. as a whole, the cost is about $4.16 for each gallon of diesel.
Part of the reason for the summer-time gas costs during February can be traced to a reduction in refinery capacity. Commodities trader Dennis Gartman told CNBC Tuesday, February 19, he believed the current cost of gas was traced to what he called an “extraordinary short squeeze” caused by BP and Hess each taking down large refineries. Gartman said the reduced refining capacity pulled “almost a half a million barrels of crude oil out of the market.” BP’s refinery in Whiting, Indiana is offline for routine maintenance, but the Hess refinery in New Jersey, which was closed in January, is slated to remain offline. That could create longer-term issues for fuel supplies.
The American Automobile Association reported the refinery closures are compounded by the fact crude oil, itself, is at nine-month highs, with Brent crude at over $119 per barrel. But, there is no consensus on just how high gas prices will rise or whether the current uptick in prices will continue at its current pace. Gartman told CNBC’s Fast Money he did not expect the fuel prices to keep going up; however, John Kilduff of Again Capital in New York told reporters Tuesday he would not be surprised if gas prices hit $5.00 per gallon.