PAIN AT THE PUMP
Gasoline costs follow pollen counts higher
With spring's arrival has come an increase in gasoline prices
Spring has sprung. You can tell by increasing amounts of airborne pollen, and you can tell by what you're paying to fill your tank at the gas station.
Analysts say wholesale prices for fuel typically head higher this time of year as the market copes with increasing demands from consumers and a shrinking supply as refiners periodically shut their operations to reconfigure them to produce fuels that are blended for summer weather.
More demand and less supply pushes wholesale pricing for the product higher, and retail prices follow right along.
According to AAA, Oklahoma is among 11 states across the nation where the average retail price of gasoline on Thursday was less than $2.40 a gallon (the average price nationally was $2.59 a gallon).
Oklahoma's average retail price of gasoline Thursday was about $2.39 a gallon, up a penny per gallon compared to Wednesday's price, up about 6 cents per gallon
compared to a week earlier and up about a quarter a gallon, compared to a month ago.
A year ago, the average retail price of gasoline in Oklahoma was about $2.38 a gallon.
What makes this year a little different from 2018, however, is where wholesale (and retail) prices started the year and how quickly they've climbed.
Volatility seen
Genscape Inc., an analyst that tracks and provides real-time and historical data and forecasts on various energy markets, reports wholesale prices for gasoline in Oklahoma started off the year at a substantially cheaper level than where theywere the same time in 2018.
In the first week of January this year, it was costing just more than $1.30 a gallon at the rack (where distributors load product for deliveries to retail locations). In the first week of January in 2018, however, its cost was nearly $1.80 a gallon.
Last week, a gallon of gas at the rack was costing about $1.90 a gallon, about the same as what it cost during the same week in 2018.
Suzanne Danforth, Genscape's director of Downstream Product Development, said prices were as low as they were at the start of the year because of an abundant stored supply of gasoline, consumer demands for the fuelat or just belowhistorical averages and lowercrude oil prices, generally. Since then? Crude prices have increased. Stored gasoline levels have dropped. And demand has ticked higher, particularly during the past month, she said.
“Part is the spring break holiday, part of it also might be related to that storm that brewed over the Midwest, where folks kind of rushed to the gas station and filled up ahead of that weather event,” she said.
“So you have had better demand in an environment where prices always increase this time of year because refiners are reconfiguring their operations to move from making a winter grade of gasoline to harder-tomake summer grades.
“Fundamentals for the market are tighter than they were,” she said.
Fire? What fire?
A fire at the Intercontinental Terminals Co. in Deer Park, Texas, that started Sunday and wasn't extinguished until late Wednesday didn't directly involve any major refineries on the Gulf Coast.
However, some tanks involved in the fire held naphtha and xylene, two components typically used to blend finished gasoline.
Still, both Danforth and Leslie Gamble, a spokesperson for AAA Oklahoma, discounted any likelihood the fire directly either already is or will impact wholesale and retail prices for the fuel.
“AAA expects volatility in prices to continue during the next 70 days as seasonal maintenance of refineries continues,” Gamble stated in an email related to the topic. “This is not unordinary.
"Beyond that, we expect to see gas prices leveling off during the summer, unless unanticipated world events or natural disasters occur,” Gamble wrote.
Danforth generally agreed with AAA's outlook.
But she added pricing impacts might be seenlater if the Intercontinental Terminals event forces one or more refiners to delay operational restarts, either because they can't obtain supplies of those components from alternative sources or must make alternative, more costly arrangements to acquire what they need.
“There might be some psychological impact,” she said. “But what really is affecting gasoline prices the most is this question of how long plant maintenance activities are going to continue."