“Paying $2 for gas will seem like a distant memory for most drivers in the coming weeks,” said Avery Ash, AAA spokesman. “Gasoline remains much cheaper than in recent years, but drivers may not appreciate that fact given the steep increase in price over the past month.”
The average price of gas in February was $2.23 per gallon, which was the cheapest February average since 2009. The average in February 2014 was $3.34 per gallon.
U.S. average gas prices reached a low of $2.03 per gallon on January 26 after dropping for a record 123 consecutive days. Gas prices have increased every day since reaching that low.
Crude oil prices have increased since late January, which has helped push gas prices higher nationwide. The price of globally traded Brent crude has increased by more than $12 per barrel, while domestic WTI is up by more than $4 per barrel. Crude oil is the primary component of gasoline, and every $1 increase in the cost of crude oil can lead to a nearly 2.5 cent per gallon increase in the price of gasoline.
Gas prices typically rise this time of year as refineries conduct seasonal maintenance, which can limit fuel production and supplies at a time when demand begins to rise. Many refineries conduct maintenance in late winter and early spring so that equipment will run smoothly during the busy summer driving season. Last year, average gas prices increased by about 43 cents per gallon from early February to late April.
California’s gas prices have increased by about 95 cents to an average of $3.39 per gallon in just 31 days. In the past week alone, average prices in California are up 43 cents per gallon. Gas prices in neighboring states also have begun to increase quickly given the supply issues in California.
Drivers in California face higher gas prices due to in part to an explosion at the ExxonMobil refinery near Los Angeles, which has limited gasoline production at a time when refinery production already is down because of seasonal maintenance. The refinery typically produces nearly 10 percent of the gasoline sold in the state, and the decline in production has helped lead to lower regional supplies. It can be difficult for local production to meet demand when California’s refineries experience problems because there are no pipelines that connect the state to the major refining regions east of the Rockies.
AAA Expects Gas Prices to March Higher During the Month
AAA believes the national average price of gas could rise by 20 cents per gallon or more in March as refinery maintenance season continues. Despite the expected increase, most regions should see prices remain much lower compared to recent years due to cheaper crude oil costs and above-average gasoline supplies.
“Gas prices likely will rise higher in March as refineries conduct seasonal maintenance,” continued Ash. “The good news is that most U.S. drivers should still pay less than $3 per gallon to fill up their cars this year.”
Domestic stocks of crude oil have climbed to a record 434 million barrels due to abundant production. This crude glut is likely to continue as refineries conduct maintenance and produce less petroleum in the coming weeks, which should help limit any price increases for crude oil.
Unexpected refinery problems can happen throughout the year given that refineries operate complex machinery. Unfortunately for drivers, any additional unexpected problems this month could lead to a temporary surge in prices because overall production already is down due to maintenance.
Refinery production has so far been largely unaffected by the ongoing labor strike by the United Steelworkers, with the exception of the Tesoro refinery near San Francisco, which has extended its maintenance period due to the strike. The market will closely watch whether the strike expands or begins to impact production.
Very Few Stations Selling Gas for Less than $2 per Gallon Today
Only about one percent of all U.S. stations are selling gas for less than $2 per gallon today, which is a dramatic reversal from January when more than 6 in 10 stations were selling gas for less than that price.
About 18 percent of U.S. stations are selling gas for more than $2.50 per gallon today, which is about five times as many as a month ago. Nearly seven percent of all U.S. stations are selling gas for more than $3 per gallon, which compares to just a handful of stations a month ago.
The most common price in the country today is $2.299 per gallon, yet the most common price in January was 1.899 per gallon.
The five states with the highest average prices today include: California ($3.39), Hawaii ($3.05), Nevada ($2.79), Oregon ($2.78) and Alaska ($2.77). The five states with the lowest average prices today include: Utah ($2.05), Idaho ($2.05), Wyoming ($2.09), Montana ($2.11) and South Carolina ($2.13).