War, Refineries Keep U.S. Gasoline Prices Elevated

---

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

---

Summary

The refinery-dense Gulf Coast was limited by maintenance. Conflict in the Middle East is keeping oil prices elevated. Both are creating spikes in domestic gasoline prices.

---

Outages a Bit Higher Than Expected

Supply-side strains from the conflict in the Middle East, along with elevated demand and domestic refinery issues, left U.S. retail gas prices elevated, data show.

In the refinery-rich Gulf Coast, where retail gasoline prices are typically well below the national average, IIR Energy found at least four refineries curtailed by maintenance. According to Industrial Info Resources data, PBF dealt with the consequences of a May 8 explosion at its refinery in Chalmette, Louisiana, which can process 192,000 barrels per day (bpd).

At $4.05 per gallon, the state average price for regular unleaded in Louisiana is 10% higher than last month.

In Texas, at least 10 units at Valero's 96,000-bpd Bill Greehey Refinery-East in Corpus Christi, went offline on Friday because of a power outage.

For more information on these facilities, the Industrial Info Resources Global Market Intelligence (GMI) Petroleum Refining Plant Database offer details--including capacities, maintenance schedules and necessary equipment--in profiles of the Chalmette Refinery and Bill Greehey Refinery-East.

In its U.S. refinery report for the week ending May 15 IIR Energy found outages at crude distillation units (CDUs) were slightly higher than expected. Meanwhile, markets are keeping an eye on yet-another prospect for a Pakistani-mediated effort to calm tensions in the Middle East.

Apart from the pressures from overseas conflict, a number of refineries went through maintenance last week. PADD II, which covers much of the Great Lakes region, experienced lower-than-expected outages after Marathon completed work at its 290,000-bpd Robinson Refinery in Illinois earlier than expected. Also, a CDU went down at the company's Catlettsburg Refinery in Kentucky, sidelining 95,000 barrels in throughput, but work there was completed last week.

The price for Brent crude oil, the global benchmark, was up nearly 2% in pre-market trading on Friday to move near $105 per barrel. The price is actually down about 4.5% on the week, though Brent trades above $100 through the August contract.

Memorial Day Weekend Kicks Off Summer Driving Season

"With gasoline demand on the rise and the prolonged closure of the Strait of Hormuz, pump prices are likely to remain elevated as the summer travel season gets underway," travel club AAA reported on Friday.

AAA put the national average retail price for a gallon of regular unleaded at $4.55 on Friday, more than 40% above year-ago levels. The all-energy component of the Consumer Price Index rose 17.9% annually to April, showing the conflict in the Middle East is impacting inflation.

But U.S. consumers don't seem to care, based on federal data. The U.S. Energy Information Administration, the U.S. Department of Energy's data cruncher, reported that the total amount of refined petroleum products supplied to the market, a proxy for demand, for the four-week period ending May 15, was up 3.1% from the same period last year.

For just motor gasoline, the market appetite was 0.5% greater than last year. AAA said travel this holiday weekend is expected to match levels from 2025, when the retail average was $3.20 per gallon.

By the Numbers

• 3.1% increase in implied demand for refined petroleum products
• 10 units out at Valero refinery in Corpus Christi

Travel Surge During an Affordability Crisis?

From overseas, the perception does not justify an increase in consumer demand, however. Tamas Varga, an analyst at London oil broker PVM, said there are clearly some looming economic hardships in store for U.S. households.

"The rise in the cost of goods in the U.S. is the steepest in three years, while pump prices are the highest since the immediate aftermath of Russia's invasion of Ukraine," he wrote in a Friday newsletter. "Elevated forecourt prices are driving inflation higher, and when inflation exceeds wage growth, the economic outlook turns grim."

While there may be no end in sight for the conflict in the Middle East, at least some of the domestic issues in the refinery sector should be over soon. Only PADD 5, the West Coast, has planned maintenance at its refineries next week, IIR Energy reported.

Key Takeaways

• Only PADD 5 has planned maintenance next week.
• Energy prices continue to drive up inflation.

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 validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).