U.S. Drivers Weary as Gas Station Prices at August High

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

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Summary

Though crude oil prices have settled down from war-time highs above $100 per barrel, U.S. consumers aren't getting a break. Retail fuel prices are above $4 per gallon nationally.

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Lingering Pain at the Pump

With few disruptions to the energy sector at home, travel club AAA said U.S. retail gasoline prices were the highest ever for August 21 because of market pressure from the war in the Middle East.

U.S. Energy Secretary Chris Wright spoke from Houston last week, saying the federal government was looking for ways to improve refinery throughput, ostensibly to keep a lid on retail gasoline prices.

There are a handful of issues along the Gulf Coast, known in industry parlance as PADD 3. In a weekly refinery report, published Wednesday, Industrial Info Resources noted that Valero was still undergoing maintenance at a refinery in Norco, Louisiana, that can process 235,000 barrel per day (bpd).

An outage alert from Friday, meanwhile, found there were electrical issues curtailing operations at the Tulsa East Refinery (Fuels) (East), operated by HF Sinclair Corporation. That facility, however, is only a minor producer of refined petroleum products.

Industrial Info Resources offers more information on these developments in its Global Market Intelligence (GMI) Petroleum Refining Plant and Project databases, where readers can find details--including construction schedules, investment values and necessary equipment--in a outage report for Norco and a plant profile for Tulsa East.

Industrial Info's report added that outages are expected to decrease into next week. But that hasn't made it to the consumer level, because crude oil prices remain stubbornly high.

By the Numbers

• 2.9% year-on-year decline for demand of refined petroleum products
• $4.10 the highest retail price for gasoline for August 21, AAA reported

Sluggish Demand not Much Help

On Friday, AAA put the national average retail price for a gallon of regular unleaded at US$4.10, the highest ever recorded for August 21.

"Even though gasoline demand is down, which is typical for this time of year, crude oil is pushing up the national average," the club stated. "Crude oil prices remain in the $80-per-barrel range amid continued instability in the Strait of Hormuz."

West Texas Intermediate, the U.S. benchmark for the price of oil, was trading in the upper $80 range on Friday, and is up nearly 3% on the month, with no end in sight to the conflict in the Middle East.

Amid a weapons shortage and military turnovers, U.S. President Donald Trump is turning up the economic leverage on Iran, while risks to shippers in the region remain high. On Thursday, the United Kingdom Maritime Trade Operations Center reported a tanker was hijacked off the coast of Yemen, where the Iranian-backed Houthi rebel group remains active.

Trump this week announced Iran would face "unprecedented" economic pressure that would force it to change course. Iranian claims to the Strait of Hormuz, however, continue to limit global trade.

On the demand side, federal data pointed to a decline just ahead of the start of the school year in the U.S. In a report covering the week ending August 14, the U.S. Energy Information Administration (EIA) reported that the total amount of refined products delivered to the market over the last four weeks averaged 20.5 million bpd. That's a proxy for demand and the level is down 2.9% from this time last year.

Meanwhile, EIA data showed that refineries were operating at 97.2% of their peak capacity, showing the federal government can only do so much. It's largely crude oil prices too that account for the bulk of the pain at the pump, and those prices are reflective of global issues.

The Trump administration has come through with something of a solution, however. On Thursday, the U.S. Environmental Protection Agency said it would waive some rules for gasoline blending starting September 1 that effectively ends the mandate for so-called summer gasoline a few weeks early.

Summer gas is more expensive than the winter blend, because more processes are needed to keep it from evaporating in the tank during warmer months.

Key Takeaways

• Pain at the pump is a growing political concern
• War-driven crude oil prices account for the bulk of what consumers see at the pump

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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).