Prices Surge In Midwest, Pushing National Average Higher
The price of a gallon of unleaded gasoline starting going up again, for nearly everyone in the United States, during the past week, breaking a brief downward trend that provided a respite for drivers. Just in time for the Christmas holiday, the Energy Information Administration’s latest survey shows the price of gas wrapped the week higher, moving up to $3.27 per gallon, erasing the price gains consumers had enjoyed at the pump just last week. Only the West Coast and Rocky Mountain states fared well last week, as prices remained flat in those regions.
Midwest Gets Hit With Price Volatility
Gas prices spiked across the Midwest, with surges over 8¢ per gallon in many areas, and higher in some. The average price of a gallon gas jumped from $3.08 to $3.16 during the past week. While winter weather may have contributed to the surge in prices, the more likely cause is the pricing volatility that can sometimes affect the Midwestern states. Indiana Public Media reported just last month that profit margins at stations in some cities are half what they are in other regions of the United States.
The executive director of the Indiana Petroleum Marketers and Convenience Store Association, Scot Imus, told indianapublicmedia.org some stations even sell gasoline below cost so they do not lose customers, but the flip side is the prices can often swing quickly — sometimes within an hour — to the upside.
Crude Prices Keep Rising Amid New Geopolitical Uncertainty
The price of crude oil continued its stratospheric reach during the past week, particularly with West Texas Intermediate futures, which were closing in on $100 per barrel during the past week. The price of WTI had been as low as $93 per barrel at Thanksgiving, but the cost of January deliveries has exploded on the trading floor, this as investors fear supply disruptions of Brent Light Sweet crude, which is being affected by political unrest overseas.
Brent, meanwhile, continued hovering around $112 per barrel in thin trading ahead of the actual Christmas holiday. The price point is not only a high for December but all of 2013, and overall, prolonged price trades of Brent have not been this high since March 2012.
The overseas instability in Libya persisted during the past week, despite assurances last week that supplies would begin returning to normal levels. Add to that new problems in South Sudan, where political instability has continued to plague the new nation and the economic infrastructure, or lack of it, inside the nation’s borders. A dispute over an oil pipeline that is shared with North Sudan, plus the potential for internal political strife within South Sudan, have resulted in a reduction of daily supply. Currently, the production of crude in the two Sudans is down about 45,000 barrels per day.
Diesel Prices Remain Flat Amid Gas Price Fluctuations
The pricing volatility that has affected both crude oil and the consumer gas prices does not appear to be impacting diesel fuel prices, according to the weekly EIA report. Prices for most regions were flat to just higher, with the Central Atlantic states paying a penny per gallon more this week than last. However, the broad U.S. average price for a gallon of diesel remains around $3.87 per gallon, the same as last week and about a penny per gallon less than reported two weeks ago.
However, the news may not remain so pleasant for diesel drivers, particularly truckers, who have to buy large volumes of fuel. The price of diesel typically lags behind the trend for gasoline, according the EIA 2013 surveys. If that trend holds through the holiday, truckers are likely to see their fuel costs increasing just ahead of the New Year.