The seasonal surge in gasoline demand ahead of the Memorial Day weekend sent pump prices climbing as drivers fueled up for holiday road trips. The deal to raise the nation’s debt ceiling may also bring a rally in oil and gas prices. Still, drivers are saving about a dollar a gallon compared to last year when pump prices skyrocketed above $5. For the week, the national average for regular rises four cents to $3.58 a gallon. The Oregon average adds eight cents to $4.27.
“An increase in demand for gas and a drop in gasoline stocks in the U.S. have put upward pressure on pump prices. Increases are mitigated by relatively low crude oil prices which remain below $75 per barrel. Pump prices should stabilize or even tick lower in the coming weeks,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “Factors that could push pump prices higher this summer are refinery issues, hurricanes, or major economic or geo-political events.”
OPEC+ is holding its next meeting June 4 in Vienna. At its April meeting, the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, known collectively as OPEC+, announced that the cartel would cut oil production by just over 1 million b/d through the end of 2023. The news sent oil prices above $80 per barrel, but then crude fell below $80 on April 19 on economic concerns and has remained below $75 per barrel since May 2.
Crude oil is trading around $70 today compared to $73 a week ago and $115 a year ago. In April, West Texas Intermediate ranged between about $73 and $83. In March, WTI ranged between about $64 and $81 per barrel. In February, WTI ranged between about $73 and $80 per barrel. In January, WTI ranged between about $73 and $82 bbl. Crude reached recent highs of $123.70 on March 8, 2022, shortly after the Russian invasion of Ukraine, and $122.11 per barrel on June 8, 2022. The all-time high for WTI crude oil is $147.27 in July 2008.
Crude oil is the main ingredient in gasoline and diesel, so pump prices are impacted by crude prices on the global markets. On average, about 56% of what we pay for in a gallon of gasoline is for the price of crude oil, 20% is refining, 11% distribution and marketing, and 14% are taxes, according to the U.S. Energy Information Administration.
Demand for gasoline in the U.S. demand increased from 8.91 to 9.43 million b/d for the week ending May 19. Rising demand has helped to boost pump prices. This compares to 8.80 million b/d a year ago. Meanwhile, total domestic gasoline stocks decreased by 2 million bbl to 216.3 million bbl. If gas demand grows amid tighter supplies, drivers will likely see pump prices rise.
The West Coast region continues to have the most expensive pump prices in the nation with all seven states in the top 10. It’s typical for the West Coast to have six or seven states in the top 10 as this region tends to consistently have fairly tight supplies, consuming about as much gasoline as is produced. In addition, this region is located relatively far from parts of the country where oil drilling, production and refining occurs, so transportation costs are higher. And environmental programs in this region add to the cost of production, storage and distribution.
As mentioned above, California has the most expensive gas in the nation for the 13th week in a row. Hawaii Washington, Arizona, Nevada, and Oregon round out the top six. Alaska is eighth. Oregon is sixth for the sixth week in a row.
States in the West Coast region are seeing small to moderate changes on the week: Arizona (-9 cents), Oregon (+8 cents), Washington (+7 cents), California (+5 cents), Nevada (+4 cents), Alaska (+2 cents), and Hawaii (-2 cents).
The refinery utilization rate on the West Coast rose from 85.8% to 86.9% for the week ending May 19. This rate has ranged between about 73% to 92% in the last year. The latest national refinery utilization rate is 91.7%.
According to EIA’s latest weekly report, total gas stocks in the region decreased from 28.93 million bbl. to 27.79 million bbl.
A higher refinery utilization rate can put downward pressure on pump prices, while a decrease in gasoline stocks can put upward pressure on pump prices.
For the week, the national average falls four cents to $3.95 a gallon. The record high is $5.816 set on June 19, 2022. The Oregon average dips two cents to $4.43. The record high is $6.47 set on July 3, 2022. A year ago the national average for diesel was $5.52 and the Oregon average was $5.72.