Report Says Summer Gas Prices Could Exceed $4.11 Per Gallon Record Set in 2008
PORTLAND, ME – In the latest report from Wright Express (WEX), the company said gas prices could potentially surpass the record high of $4.11 in 2008. The company did say that most analysts don’t expect prices to remain at that level for long, and that they won’t go above the record price by too much. Still, this means fleet managers can expect to spend more on fuel as the year passes.
WEX commented on the how tensions in the Middle East are affecting prices, saying that the market “remains extremely nervous and susceptible to buying frenzies on any news from the Middle East.” Sweet crude for refiners on the East, Gulf, and West Coasts passed $125 per barrel in late February, driving up prices on a regional basis, as described by AAA and the EIA.
In the northeast, refinery closures and oil prices are pushing wholesale winter gasoline to $3.16 per gallon, with summer wholesale gasoline some 15 cents per gallon higher. Gulf Coast refineries are coming back from turnaround, so prices there are around $3.10 per gallon, but WEX expects much higher forward numbers for spring blends. The Midwest has commenced its transition to lower Reid Vapor Pressure gas, which WEX said is bringing wholesale spot prices toward $3.20 per gallon.
WEX said the next couple weeks should be the peak for refinery maintenance in 2012, but that reduced refining capacity of about 500,000 barrels won’t return due to idled refinery production capacity. What could offset that would be the start of 325,000 barrels per day at Motiva’s Port Arthur, Texas, expansion, which WEX said the industry expects to begin in 30 to 90 days.
All of these price increases are occurring despite low demand. According to WEX, over the last four weeks, petroleum demand is off by more than 1 million barrels per day from last year.
This chart shows retail and gasoline prices between Feb. 2010 and Feb. 2012.