Refineries in the U.S. Midwest start processing steps necessary to stimulate consumer prices at the pump, analysis finds. Photo by Pattie Steib/Shutterstock
WASHINGTON, Feb. 23 (UPI) -- A move by refineries in the U.S. Midwest tugged gasoline prices higher on average as the sector moves to counter lower oil movements, analysis finds.
Retail price watchdog GasBuddy.com reports a gallon of regular unleaded gasoline in the United States cost $1.70 on average Tuesday, a slight decline from the previous day but up a fraction of a percent from last week. The price at the pump remains 13 cents, or about 7 percent, lower than one month ago.
Gasoline prices during winter months tend to be lower because inclement weather and shorter daylight hours keep most drivers home. Refiners also process a winter blend of gasoline, which is less expensive than its summer counterpart because of fewer environmental requirements.
GasBuddy finds the recent fluctuations in gas prices highlighted extreme movements in regional markets, with the West Coast showing dramatic declines against steep increases in the Midwest.
"The West Coast enjoyed what the Midwest previously had: a fire sale of gasoline, brought on by a messy situation as refiners attempt to transition to cleaner summer fuels," a weekly emailed report read. "In the Midwest, the party was ruined by refiners who began to make run cuts, as economics pushed them to the brink."
Runs refer to the amount of gasoline processed at refineries. Some companies in the Midwest scaled on processing in order to stimulate retail prices.
Refinery issues were behind a string of movements in retail gasoline prices. PBF Energy Inc. said the winter storm that hit the eastern U.S. in late January caused power outages at its refinery in Delaware City, Del., skewing the U.S. national average for a gallon of gasoline moderately higher last month.
Apart from the trends at refineries, market fundamentals may drive retail gasoline prices higher. Crude oil prices finished last week up 4.5 percent on word that some members of the Organization of Petroleum Exporting Countries would freeze production at January levels in an effort to influence oil prices. This week, the International Energy Agency said U.S. crude oil production fades short-term under the pressures of a weak oil economy, easing concerns about long-term oversupplies.