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Midwest gas prices pull national average higher

Some retail market pressures may fade as global supply disruptions end.

By Daniel J. Graeber
Midwest gas prices pull national average higher
The national average price for a gallon of gasoline is the highest it's been for the year as global production disruptions influence oil supplies. File photo by Bill Greenblatt/UPI | License Photo

WASHINGTON, June 14 (UPI) -- Retail gasoline prices are at their highest levels for the year, with Midwest markets skewing the U.S. average higher on pipeline and refinery issues, AAA said.

Motor club AAA reports a national average retail price for a gallon of regular unleaded gasoline in the United States at $2.37 per gallon, about 0.7 percent higher than last week and 7.8 percent higher than one month ago.

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Gas prices on average are the highest they've been since September, moving in parallel with crude oil prices. Oil prices represent the bulk of what consumers pay for gasoline and with disruptions to production in two of the top 10 exporters to the United States -- Canada and Nigeria -- markets are under pressure.

Crude oil prices are up about 5.5 percent, or $2.62 per barrel, from one month ago as production outages influence market dynamics.

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"With all other factors being equal, a $1 per barrel change in the price of crude oil can increase gas prices by 2.4 cents per gallon," AAA explained in a retail market report.

The national average price is influenced largely by prices in the Midwest, with Michigan and Ohio representing two of the top three most expensive markets in the country. California's state average price of $2.86 is the highest in the country, with Michigan taking the No. 2 spot at $2.74.

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South Carolina, by comparison, has the lowest state average in the nation at $2.07 per gallon. Midwest markets are facing additional supply pressures because of an oil pipeline outage in Wisconsin and refinery outages in Michigan and Illinois.

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According to AAA, some of those market pressures are short-term. While Nigerian production is under pressure from militant activity, oil production in Canada is slowly returning to normal after May wildfires ebb.

"Despite these supply issues, refinery production has increased over the past few weeks, while supplies are still about nine percent higher than a year ago," AAA added.

A market review from the U.S. Energy Information Administration forecasts a full-year average price of $2.13 per gallon, an estimate that's 5 cents higher than a forecast from last month.

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