Inexpensive winter prices give way to strong seasonal demand, refinery maintenance
BOISE – (April 29, 2019) – To begin the year, Idaho drivers had plenty to celebrate – gas prices, which started to drop after Labor Day last year, continued to plummet for most of the winter. At one point, Idaho’s average price was $2.29, which was 32nd in the country for most expensive fuel (usually in the 7-9th place range), and from February 18 to April 18, Idaho’s average price also dipped below the national average. But for the most part, the savings have come to an end.
Today, the U.S. average price for a gallon of unleaded is $2.89, which is 19 cents more than a month ago and eight cents more than a year ago. While the current price in Idaho is $3.02, there is a small silver lining of sorts – today’s price is 48 cents more than a month ago, but it’s still six cents less than a year ago. AAA expects prices to increase in the weeks leading up to Memorial Day.
On Friday, Idaho’s average price topped $3 for the first time this year, primarily due to increased demand and reduced refinery capacity during a time of seasonal maintenance.
“When refineries make the switch to the more-expensive summer-blend fuel, they usually take the opportunity to catch up on maintenance and repairs,” says AAA Idaho public affairs director Matthew Conde. “In the Rockies region, refinery utilization is generally in the 91 to 93 percent range, but last week, overall utilization dropped to 81 percent. That means that there is less fuel on hand to meet the growing demand.”
To put rising pump prices into perspective, AAA and OPIS recently measured how much extra time a person would have to work to pay for a gallon of gas today vs. the beginning of the year. At this time, the average worker in seven Idaho counties would have to work an extra minute or two for every gallon of gas – Clearwater, Lewis, Gem, Ada, Canyon, Payette, and Kootenai. That number sounds small, but for motorists who may need to fill up each week, it can add up in a hurry, requiring hours of extra work over the course of the year just to break even.
“As part of AAA’s research on travel trends, we’ve learned that most people won’t adjust their vacation plans until pump prices are at $3.50 or above,” Conde said. “Because fuel is the lifeblood of the road trip, people may make adjustments in other areas, such as cheaper dining options, to help offset the additional expense.”
The Energy Information Administration reports that the Rockies region’s gasoline stocks increased for the first time in more than a month, pushing the total to seven million barrels. This helped to slow rising prices last week, and if the trend continues, price hikes could slow down even more.
Uncertainty abounds in the global crude market, keeping oil prices in a state of disarray. The West Texas Intermediate (WTI) benchmark jumped to begin the week on news that the U.S. will not extend waivers to allow countries to continue purchasing oil from Iran. In coming weeks, this action could tighten the global supply. However, crude prices dropped to their previous levels to end of the week.
Sanctions on Iran and Venezuela, and reduced production from OPEC (Organization of the Petroleum Exporting Countries), have been partially offset by increased domestic production. Nationwide crude inventories increased by more than five million barrels to 460 million barrels last week.
Today, the WTI price is about $64, up nearly 20 dollars from the beginning of the year.