Monthly Archives: February 2015

Gas Prices Rise, But Pace Of Increase Slowing

Third Consecutive Week Of Price Hikes May Only Be Beginning

Gas price trend for week of February 23, 2015The price of gas increased another six cents on the week, according to the latest report from the U.S. Energy Information Administration. The weekly survey of districts shows the average price of a gallon of regular unleaded is now $2.33, up 19¢ in the past three weeks. The weekly price increases were led by shocking hikes across California and the broader West Coast Region, where prices jumped 14¢ and 9¢, respectively. Price increases across the rest of the nation were either at or below the national average increase of 6¢ per gallon.

Diesel Increasing In Price The Same Way It Declined: Slowly

For truckers, the price of diesel also increased, but not as intensely. The nationwide average cost for a gallon of diesel is now $2.90, up about 4¢ on the week. The price of diesel came down sooner than its regular gasoline counterpart in 2014, but it did so at a slower rate than gas. As unleaded fuels have increased in price, the diesel price increases have also been moving at a slower pace, which means somewhat less volatility, at least at the retail level.

Crude Volatility And Summer Blends Influencing Gas Prices

The price changes are reflective of continued uncertainty in the crude oil futures markets, which have found a broad trading range during February. A supply glut is forecast to persist through at least the second, and most likely the third quarter, according to industry analysts, which was a significant part of the precipitous declines seen since July. Both Citigroup’s Edward Morse and Vitol Group’s Ian Taylor opined two weeks ago that crude oil prices were still likely to trend lower until later this year. They disagreed on the timing of a future upward move in crude, but the consensus was that the oversupply causing the downward price pressure would continue until well into the summer.

Tri-State Tollway view from the Hinsdale Oasis

This summer view of the Tri-State Tollway, near Chicago, may seem like a distant memory now, but refinery operators are already switching to output summer gasoline blends, contributing to higher prices.

The other factor is the summer fuel blends, themselves, which reflects increased refining costs for producers. That element is likely the greatest issue for consumer prices at the moment, as this is the time refineries are switching over to summer blends for the coming driving seasons.

The summer fuel blend issue aside, supply is expected to remain quite plentiful, which could put an upward limit on the current price increases. Vincent Piazza of Bloomberg Business reported February 18 shale production continues to increase, even in the current environment. The reason is the efficiency of drilling sites versus their older counterparts, many of which have been closed down in the past year.

Year On Year Prices Still Much Lower

For consumers, the price of gas is still far cheaper today than it was at this time last year. On average, most drivers are paying about $1.11 less for a gallon of gas than at this time in 2014. For truckers, the nationwide average price is down by about the same amount, at $1.12.


Gas Prices Surge Second Consecutive Week

After Months Of Decline, Prices Rebound Amid More Stable Crude Prices

Gas price trend for week of February 16, 2015The price of gas took another leap higher during the past week, according to the latest report from the U.S. Energy Information Administration. The weekly E.I.A. report shows the cost of gas jumped eight  cents last week, and that followed a week in which prices jumped 12 cents per gallon. In all, however, the price of gas is still significantly lower that it was at this time last year. As it stands, the national average price for a gallon of regular unleaded is $2.27, which is 23¢ higher than where gas settled at the end of January.

West Coast drivers suffered the biggest price increase, by region, during the week. The E.I.A. survey shows consumer fuel costs jumped 15¢ per gallon, by far the highest increase nationwide. The runner up, the Gulf Coast states, had a price increase of nine cents per gallon.

Prices along the Gulf Coast have been rising faster than other regions. Photo: Eric Scallion.

Prices along the Gulf Coast have been rising faster than other regions. Photo: Eric Scallion.

The numbers by state are equally dramatic. In California, which lead the West Coast price surge, the coast of a gallon of gas soared over 17¢. In Florida, where early spring break travelers will soon be arriving for vacation, the cost of filling up rose 12¢ per gallon.

Truckers Hit With Less Costly Price Increase

Diesel prices are also rising, but not as severely. The average cost of a gallon of diesel, nationwide, settled at $2.87 this week, which is up three cents over last week. However, like regular unleaded, diesel prices went up considerably more along the West Coast, particularly California, where prices were up eight cents per gallon.

Crude Oil Prices More Stable, At Least For The Moment

The current price rebound in gas and diesel can be attributed, at least in part, to the leveling of crude oil prices, which had been in a free-fall for several months. However, both West Texas Intermediate and Brent Crude have stabilized. WTI, a domestic futures benchmark, has been trading in a range between $48 and $54 per barrel for the past two weeks. Brent has been trading in a wider range, but traders have been bidding Brent higher, unlike WTI. What is more, Brent closed above $60 per barrel for two consecutive sessions this week before sliding just under that key threshold in Wednesday trading.

Year On Year Gas Prices Still Considerably Lower

Meanwhile, as much as gas prices have done an about face in recent weeks, the year-on-year numbers are still staggering in their consumer favoritism. The average driver is currently paying about $1.10 less for a gallon of gas than last year at this time, and some regions are enjoying prices that are about $1.25 less than a year ago, including New England and the Rocky Mountain region.



Gas Prices Do High-Octane About Face

Government Report Shows Retail Prices Jump As Crude Rebounds

Gas price trend for week of February 9, 2015In a stunning reversal of course, gas prices lurched upward more than 12¢ on the week as crude oil prices finally leveled off and began to rebound from a six-month period of decline. That means a reversal of fortune, of sorts, for American drivers, as consumer prices are matching the crude oil pricing trend. The weekly gas price survey from the U.S. Energy Information Administration shows the national average price of a gallon of unleaded gas is now $2.19, up from $2.07 last week and a low of $2.04 just two weeks ago.

Regional Prices Spike In West and Midwest

Prices across the West Coast soared on a spike in California gas prices. Retail gasoline in the Golden State hit an average of $2.63 this week, up from $2.44 last week. That spike in costs helped drive the overall West Coast average 7¢ higher to $2.47 per gallon. The Rocky Mountain States bumped the Gulf Coast survey region to become the cheapest place to buy fuel. Average unleaded price across the Rocky Mountain states settled at $1.95 last week. Drivers in Gulf Coast states are paying an average of $1.98.

Service plaza on Indiana Toll Road

Gas prices across the Midwest, like at this station on the Indiana Toll Road, soared as much as 20¢ per gallon on the week.

Midwest gas prices tracked significantly higher for the second consecutive week. A jump in prices last week pushed the broader U.S. average higher; in retrospect, that may become viewed as the portent of things to come nationwide. The Midwest price average is now $2.17 per gallon, up from $1.94 only two weeks ago. As with last week, Ohio led the charge toward higher pricing with a 20¢ per gallon increase in prices, and that beats last week’s 14¢ increase. Minnesota drivers were lashed with a 16¢ per gallon price hike.

Crude Oil Prices Change Direction After Six Months

While futures prices scarcely moved in Monday trading, both domestic and overseas futures indices have been moving higher since January 29, at time when both West Texas Intermediate and Brent Crude were trading below $50 per barrel. WTI closed at $52.43 Monday afternoon, while Brent was at $57.98 per barrel.

The rebound in crude prices is not being called a recovery, however. In fact, a report from Citigroup on Monday, coupled with a warning from the world’s largest independent oil trader, suggests the price of crude could be set to fall into the $30 to $35 per barrel range. Executives of both Citi and The Vitol Group warned Monday that continued oversupply in the United States would drive prices significantly lower, despite slowing spending overseas.

Citigroup’s Edward Morse, head of the company’s global commodities research, wrote that U.S. production levels will likely remain high through the third quarter, putting downward pressure on crude oil prices, particularly WTI, the U.S. domestic benchmark. The Vitol Group’s Chief Executive, Ian Taylor, concurred, in an independent opinion. Taylor said Monday he believes it possible another downward move in crude oil is coming, and he said U.S. production was the driving force behind that potential. Taylor said the market looks long for the first half of the year, but he predicted the oil market will “move into balance” in the second half of 2015.


Spike In Midwest Gas Prices Brings National Average Up

Price Hikes In Ohio Rival Winter’s Brutality

Gas price trends for week of February 2, 2015A 14¢ surge in the price of gasoline in Ohio, coupled with significant gas price increases across the Midwest, contributed to a substantial about face in average prices for the region. The spike in prices was so significant, it pushed the national average gas price upward for the first time since the September 1, 2014 pricing survey. The latest weekly survey from the U.S. Energy Information Administration shows the average price of a gallon of regular unleaded is now $2.07, nationwide, essentially reversing last week’s price gain. But the numbers do not tell the entire story.

Removing the Midwestern region from the pricing formula, U.S. average gas prices would have gone down over 6¢ to settle at an average of $1.98. Prices in nearly all other survey districts were down, and while the pricing declines have slowed in recent weeks as crude oil prices stabilize and even rally, most drivers are not feeling the seasonal pinch on their wallet like they did last year at this time.

Diesel Fuel Prices Continue Falling

Diesel fuel pumpMeanwhile, diesel fuel continued to fall at a fair pace, as the U.S. average price for a gallon of diesel dipped to $2.83, down about four cents on the week. The prices in the New England states increased by a penny, but prices in all other regions were down. The West Coast, in particular, enjoyed a price drop of nearly 6¢ per gallon, while prices across the Lower Atlantic were down over 4¢.

The gas pricing trend, sans the anomalous Midwestern averages, has continued to favor the consumer, despite the fact crude oil prices were no longer declining at their formerly precipitous rate. In fact, West Texas Intermediate has rallied, along with U.S. domestic crude and Brent, over the past three trading sessions. Tuesday’s rally was so significant, it brought U.S. domestic crude back over the $50 per barrel mark. WTI crossed that threshold on Monday.

Crude Oil Could Turn Lower, Despite Recent Rallies, Says Expert

However, at least one market watcher tells CNBC he forecasts additional lows for crude oil. Stephen Schork of The Schork Report told the financial news network that he believes the current rally is just a “dead cat bounce,” and that crude oil still has significant declines ahead of it.

He pointed out that global daily demand has fallen by 1.6-million barrels of oil each day, and without demand, prices can not recover. “The bottom line here is, we do not have enough demand, and the demand is going to be weak for the next two to three months, and we have too much supply,” he said.