Gas Prices Leveling Off as Refineries Ramp Up

Production back to normal output.

by on May.10, 2016

After climbing upward to a six-month high in early May, gasoline prices seem to have stabilized.

After reaching its highest point in six months in early May, the price of gasoline is showing signs of leveling off, ending the steep climb that raised the average price of gasoline as the spring driving season picked.

The price of gasoline at the pump declined slightly during the past week, according to the AAA. The group also said it is possible that prices have begun to stabilize as refineries increase production to meet record-high demand.

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The average price of $2.21 per gallon represents an increase of 17 cents per gallon on the month, and prices have moved higher for 23 of the past 31 days.

“Despite this recent trend higher, retail averages are down by one cent per gallon on the week, and drivers continue to benefit from year-over-year discounts, saving 45 cents per gallon on the year,” AAA reported.

Gasoline demand reached its fourth-highest weekly estimate for 2016 and remains well above year-over-year levels, according to AAA. The market is well supplied with product, but the growth demand could cause pump prices to become volatile leading into the summer driving season.

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AAA said refineries nationwide are ramping up production, which should help increase supplies in regional markets.

In addition, the U.S. EIA, total U.S. gasoline supplies are at their highest levels to start May on record. Historically gasoline demand increases leading into the summer driving season, and this year so far is no different.

However, lower gas prices are also encouraging drivers taking to the roads at record levels and the 2016 summer driving season is expected to rival 2007 when gasoline demand hit an all-time high, AAA noted.

The nation’s five most expensive markets are: California, where the price is averaging $2.80 per gallon; Hawaii at $2. 64 per gallon; Washington at $2.49 per gallon; Nevada at $2.48; and Alaska at $2.46. The nation’s top five least expensive markets are in Oklahoma, where the price of gasoline is averaging $1.95 per gallon, Kansas and Missouri, both at $1.98, and Texas and Arkansas where the price is $2 per gallon, AAA said.

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Overall, motorists are paying less they did at this point a year ago with the largest yearly savings experienced by drivers in California, where the price has dropped 91 cents per gallon, and Nevada, where prices have dropped 73 cents per gallon year over year, according to the AAA survey.

AAA also said the wild fires around that have forced the evacuation of Fort McMurray, Alberta, have disrupted the flow of oil from the Canadian Oil Sands and pushed the global price of crude oil over the past week.

However, expectations of reduced supply were offset by news of increased production out of Iran and other OPEC and non-OPEC nations. Iran reportedly reached pre-sanction production levels, and as production countries continue to fight for market share, the global oil market is likely to remain oversupplied, AAA said.

Global oil prices also rallied over the weekend due to news that the longtime Saudi Arabian oil minister would be replaced, AAA also noted. But reports quickly surfaced that the world’s largest exporter would maintain its current course and attempt to defend its market share by sustaining production levels.

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Oversupply is likely to continue to characterize the global oil market and attention will remain focused on output from non-OPEC countries and any other factors that may help bring supply and demand into balance, according to AAA.

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2 Responses to “Gas Prices Leveling Off as Refineries Ramp Up”

  1. JAE says:

    Thanks Joseph, once again another story of pump prices stabilizing / decreasing has caused area pump prices to increase by minimum 10 cents the last couple days. Actually have seen 93 octane advertised for $3.00+ at some stations.

    Again, thanks a bunch.

  2. Bob says:

    Really?

    5/11/2016 in the morning going to work filledmy car up 2.18 gallon 10 hrs later same statiom same day that station was charging 2.49 a gallon