Mild weather stokes demand as refineries slow production to catch up on repairs

BOISE – (October 21, 2019) – It’s that time of year – refineries across the country go offline on a rotating basis to make the switch to winter-blend fuel and to catch up on needed maintenance and repairs.  Normally, the resulting decrease in fuel production isn’t much of an issue as the drive season comes to a close.  But this year has been anything but normal.

“More drivers are on the road in our region, putting additional demand on a shrinking fuel supply,” says AAA Idaho Public Affairs Director Matthew Conde.  “Our inventory is small to begin with, so when production drops this time of year, strong demand can really shock the system.”

Today, the price of a gallon of regular gas in Idaho is $2.85, which is 20 cents higher than the national average.  But there’s some good news – Idahoans are paying nine cents more than a month ago, but 27 cents less than a year ago.

In the Rockies region, refinery utilization is around 82 percent, down from 102 percent just six weeks ago.  In response, gasoline stocks have dipped below 7.3 million barrels, putting upward pressure on gas prices in the area.  On the week, Gem State pump prices went up six cents.

Similar issues are happening across the U.S. – in total, 22 states saw a price increase this week, with nine state averages jumping a nickel or more.  Current demand exceeds 9.3 million barrels of fuel per day, nearly 300,000 barrels more than a year ago.

The U.S. average gas price is $2.65, which is two cents less than a month ago, and 20 cents less than a year ago.

“Part of the challenge with maintenance is that the refineries often don’t know how much work needs to be done until they can slow down and take a closer look,” Conde explained.  “Naturally, that affects the estimated timetable for getting everything back up and running.”

Two more refineries are expected to go offline soon, both in Wyoming.  However, the impact to Idaho could be minimal, as Montana refineries supply most of the fuel used in the Panhandle, and the rest of the state is primarily served by Salt Lake refineries.


Crude oil dynamics

Although refineries and healthy consumer demand have contributed to the recent pain at the pump, crude oil prices remain steady.  Following a brief spike after drone attacks in Saudi Arabia, the West Texas Intermediate benchmark for crude oil is currently trading near $54 per barrel.

According to the Energy Information Administration, domestic crude oil inventories grew by more than 9 million barrels to reach 434 million bbl.  U.S. production hit 12.6 million barrels per day last week, and trade tensions between the U.S. and China continue.

“All of these factors lead the market to believe that there is still a global oversupply of crude oil in the market, which is helping keep prices down,” Conde said.  “However, OPEC (Organization of the Petroleum Exporting Countries) will meet in December to decide whether or not to maintain or even increase current production cuts.  That could impact prices at the beginning of next year.”


AAA expects a combination of restored refinery production, cheaper-to-produce winter-blend fuel, and impending cold weather to apply downward pressure on gas prices in the weeks before Thanksgiving.  In the meantime, drivers can save by bundling trips, avoiding stop and go traffic, and using the ‘Eco’ setting in their vehicles to improve fuel efficiency if one is available.