AAA: Despite Dip in Crude, Gas Prices Could Remain Elevated

---

Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

---

Summary

Retail gasoline prices could stay elevated through the summer, AAA said. Relief is in sight with a potential cease-fire in the Middle East, but energy markets need several months at least to recover.

---

Crude Oil Prices Ease, But Gas Still a Worry

Crude oil prices were trending lower on Friday after Iran and the United States agreed to extend a cease-fire, though travel club AAA warned that higher prices may endure through summer.

"Gas prices remain the highest they've been in four years and will likely remain elevated as the busy summer driving season gets underway," the travel club said Thursday, before the announcement of a cease-fire extension.

U.S. officials again on Friday said there was an end in sight to a conflict simmering since late February with a tentative 60-day extension to a cease-fire, though there's been no confirmation from the Iranian side. The conflict led to an energy-supply shock not seen since the initial Russian invasion of Ukraine in 2022, and Industrial Info noted there were issues with refineries in the U.S. market.

According to Industrial Info Resources data, Phillips 66 idled its Ferndale Refinery in Washington state due to an unexpected mechanical issue. The facility can process 100,000 barrels per day (bpd), and the outage means regional throughput is down about 4% as a result of the unplanned events.

Industrial Info Resources is tracking progress at 142 operational crude oil refineries across the U.S., which are home to more than $20 billion worth of active and proposed projects. Readers can learn more from a detailed list of plant profiles and project reports.

Regional markets are already tight due to the closure of some refineries in California. But both Washington state and California saw prices at the pump decline. California, which has the highest retail gasoline prices in the Lower 48 states, posted a state average of $6.05 per gallon on Friday, $1.66 per gallon above the national average, but that's lower than week-ago levels of $6.13 per gallon.

On Thursday, U.S. Vice President JD Vance tempered the prospects of a lasting truce by questioning whether the president would sign on, though he was adamant that a tentative agreement was in the works.

"It's hard to say exactly when or if the president's going to sign," Vance said, according to the Associated Press. "We're going back and forth on a couple of language points."

The price for Brent crude oil, the global benchmark, was down 1.6% in early Friday trading to move near $91 per barrel. It had topped $115 during the height of the conflict, though this week saw renewed military action on Iran from the U.S.

By the Numbers

• $6.05 for a gallon of gas in California
• 3.8% in Federal Reserve's preferred gauge of inflation

Some Energy Infrastructure Limited for Five Years

While peace may be in the works, the regional damage may take years to repair. Qatar Energy said it could be five years before its liquefied natural gas infrastructure recovers, while the Al-Jubail SATORP Refinery, operated by Saudi Aramco, has been down for more than 80 days.

Media reports Thursday added that Italian energy company Edison was told by Qatar Energy that its force majeure clause on LNG deliveries was extended one month to August.

In the U.S. economy, the world's largest, data show the index for Personal Consumption Expenditures (PCE), the Federal Reserve's preferred measure of inflation, increased 3.8% to April, well above the 2% target.

Tamas Varga, an analyst at London oil broker PVM, said even if the guns fall silent, the impacts to global energy will last.

"The impact of the energy shock will be felt in the near and perhaps even the medium-term future," he wrote in a Friday newsletter. "While a deal is eagerly awaited by every man and his dog, global oil inventories will keep depleting."

Key Takeaways

• If war ends now, energy markets still need a coping period
• Gas prices dip, but remain well above year-ago levels.

About Industrial Info Resources Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).