By on April 21, 2015

Fuel Price Circa Mid-December 2014

After a slight decline during Easter, gas prices are once again climbing back up as crude oil does the same.

The national average stands at $2.46 for a gallon of regular, the lowest price since 2009 at around this time, reports The Detroit Bureau. The price is a 7-cent increase over the past week, thanks to crude oil prices climbing 17 percent since the start of April due to a combination of decreased U.S. output, ongoing refinery issues, and possible new geopolitical issues in the Middle East.

Heading into the summer, speculation points to an oil glut as Cushing, Okla.’s storage hub quickly climbs to capacity, though a recent drop in oil levels reported by commodity intelligence company Genscape has allayed those concerns for now. The aforementioned refinery issues are another factor in pricing with the West Coast remaining on the high end of the scale.

Currently, California holds the highest average at $3.15/gallon while Alabama and Mississippi are neck-and-neck for the lowest average at $2.24 and $2.23 per gallon, respectively.

[Photo credit: Cameron Aubernon/Instagram]

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35 Comments on “Gas Prices Rising Again Behind Crude Oil Pricing Climb...”


  • avatar
    APaGttH

    Something has to give. Cushing is at 78% capacity now – tank top is 80% so for all intent and purposes Cushing is out of room. Oil supply in the United States is at an all time high and although production is flattening out, there is still an excess of oil to the tune of one-million barrels (give or take) being sucked out versus consumption – the supply data backs that up (although the increase in supply is slowing down)

    The last 20% is needed for the transfer of product in and out of the largest tank farm in the world.

    http://www.reuters.com/article/2015/04/21/us-oil-storage-cushing-idUSKBN0NC1XS20150421

    There is still a lot of additional capacity but most of it is a lot more expensive. Nothing has fundamentally changed.

    Supply still exceeds consumption.

    The winter – summer turn over is in progress

    The strike over refinery safety issues continues – despite that some strike impacted refineries are reporting record production numbers

    There remains 3,000 production sites that are drilled and capped that could be brought online in 2 days to 3 weeks. The last “mile” isn’t done, but the drilling and proving out are. Consider that storage in the ground.

    The super contango situation continues as does the glut.

    Something has to give – right now you’ve got a lot of bets that the prices will go up come the fall – but supply and demand as we creep closer and closer don’t support that picture, they support the direct opposite.

    Although prices are “up” WTI and RBOB still continue to trade in a volatile 20% band when you look at the broader trend of low-to-mid 40’s to low-to-mid 50s.

    I’m due for another update in the series — but I’m very close to my wedding and there hasn’t been a material change in the market from my last piece – other than the current price trend can’t continue to be supported when you look at supply, demand, storage capacity, and capped wells ready to be brought into production.

    In an ironic twist, the oil industry is crying peak oil, and that the shale oil will be gone in a decade or two, and we must punch holes in the north slope now to prevent an oil shortage apocalypse. Wish I could make this stuff up.

    • 0 avatar
      Landcrusher

      No one here is really crying peak oil. Either someone is trying to explain something to an idiot, and doing it badly, or someone is equivocating, or someone is being a snarkaluffagus.

    • 0 avatar
      ellomdian

      It’s fun to look at Gas prices, but the real meat of the story is what’s going on in the Energy-services sector. Nobody knows if it’s going up or down, and its blowing up small companies left and right. It’s either the worst time ever or the best time ever to be a small services company, depending on what your balance sheets looked like 18 mos ago. The end of Q1 forcing a lot of LOC’s to re-valuate based on the average price per barrel has been ugly.

      The only thing certain at this point is uncertainty in the near term. Really wish there was an easier way to trade on the volatility in the sector…

    • 0 avatar
      thelaine

      People need to buy more gas guzzling cars to soak up the excess. Time for a tax credit. Cash for guzzlers.

    • 0 avatar
      Big Al from Oz

      @APaGttH,
      There is one significant point missed in your commentary.

      What about the softening stance in relation to the Iranians?

      They have a sh!t tin of oil to increase production.

      I don’t see any light for the oil industry for several years. There’s just way too much cheap to access oil around to be sold.

      • 0 avatar
        darkwing

        No, they really don’t, and whatever surplus they have is going to rapidly need to get diverted back to domestic consumption.

      • 0 avatar
        APaGttH

        Iranian crude oil – sucks.

        It is very sour it is very heavy. It is not very desired on the market. They have long sucked out of the ground their best sources and what they are left with is very hard to process.

        Most refineries don’t want the stuff.

  • avatar
    chris724

    A $0.20 premium for 93 octane? That’s awesome! I have a hard time finding it for a $0.30 premium. Some places add $0.50 or $0.60. And almost no one posts the price for 93 octane up on the sign. I have to drive up to the pump, and if it’s bad enough I’ll drive off.

    • 0 avatar
      Scoutdude

      In the Seattle area that 20 cent spread is still pretty common in middle class areas. In poor and rich areas the spread is usually more. The interesting thing though is that at some stations they may keep the cash price spread at that 20 or 25 cent level but they will charge you 15 cents more per gallon for using a credit card while only charging you an extra 10 cents on regular. Many places around here still post the prices of all 3 grades.

      • 0 avatar

        I took that photo sometime near Christmas Eve last year; figured I’d use it again since prices are that close now.

        There’s a 7-Eleven near my home that has an odd pricing structure for its gas. For example, if a gallon of regular was $2.42, mid-grade would be $2.56, and premium would go for $2.71. Not sure why that is.

        • 0 avatar
          Scoutdude

          Because they have figured out that making that extra 4 and 9 cents per gallon on the customers that spread doesn’t chase away results in more profit than it lost by the ones that are chased away.

        • 0 avatar
          Big Al from Oz

          @Cameron Aubernon,
          The fuel retailers are constantly working on their pricing strategies.

          They will charge as much as they can in different areas. Once they find motorist are travelling to a cheaper area to purchase they then know they have over stepped the pricing.

    • 0 avatar
      Drzhivago138

      If that low premium makes it to my neck of the woods this summer, I’m tempted to see if I could break even using premium on increased cost vs. better MPG. I’ve never tried it before–and right now _diesel_ is still cheaper than premium at some stations.

      • 0 avatar
        Scoutdude

        I seriously doubt that low price spread will make it to your area. If the retailers have determined that the increased profits from those that buy it regardless of the price spread more than offset the lost sales from those who’s cars do not need it they will continue with the large price spread. They are out to maximize their profits and will continue to do so. Once someone who doesn’t really need it was chased away by the greater price spread I doubt they will come back.

        If your car is not one that says that premium is recommended then it is highly unlikely that you will see an increase in MPG from using it w/o making some sort of modification. Now if you use a tuner to increase the timing to take advantage of the higher octane you may be able to break even or come out ahead.

  • avatar
    Ron B.

    Charging extra for using a card????? here that’s what is normally used.no one carries good old cash much, unless they are a tax dodger or drug dealer/buyer.In fact our govt. made it illegal to charge like that. The top 4 companies in the world, in terms of profit etc are Australian banks so there was no need to gouge us more than they already do.
    As for fuel prices rising…well nothing beats greed like greed does.

    • 0 avatar
      Landcrusher

      citgo, owned by Venezuela, gives a discount for using their prepay cards. Always thought that was interesting.

      • 0 avatar
        Mr. K

        Hell, how much does the Visa/MasterCard duopoly charge them for using their cards?

        • 0 avatar
          Scoutdude

          It depends on the clearing house that is used. Some companies are a flat percentage of around 2-3% while others charge a 10 cents “per swipe” and a lower percentage. Your exact charge is usually dependent on the volume that you do as well. If you are a big company or chain and you consolidate the volume it can get down in the 1% range. So yeah at current prices a volume station or chain makes extra money if you use your credit card.

    • 0 avatar
      APaGttH

      Arco AM/PM charge around a dime a gallon for using credit, and the one by my house charges for credit or debit – so only good old fashioned cash will get you the lower price.

      Arco is pretty much on every corner in the PNW, and there is a BP/Arco refinery near the Canadian border (Cherry Point). Most of the oil is north slope from Alaska that arrives from tanker. 85% of all aviation fuel at Seatac airport comes for the location.

      The prevailing joke is that Arco is “ghetto gas,” in reality there are only three area refineries distributing to all the different gas station brands. So the Arco base distillate could very well be at other stations.

      For quite a while Arco couldn’t/wouldn’t take credit cards and they marketed that as a benefit.

      AM/PM – too much good stuff. I’m pretty sure their breakfast sandwich with sausage isn’t actually really food – yet it is strangely soooooooooo good.

    • 0 avatar
      Scoutdude

      After the first energy crisis and Arco making a big deal about “blowing up their credit cards” it became common for there to be a 3-5 cent “discount” for cash. At that time the price on the pump was the credit price and they had a chart that showed how much of a discount you would get by paying cash. So if you wanted to put in say $10 you pumped until you got to say $10.50 and gave them a $10. In the late 80’s or early 90’s that slowly disappeared so the price was the same for cash or credit.

      That changed again about a year ago in our area again driven by the Arco (now owned by BP) brand. They make a big marketing campaign about how they were dropping the fees to use a debit card and that they would now accept credit cards for the first time in decades. They did not however say anything about the fact that they were going to charge 10 cents per gallon to use that credit card. It didn’t take long for a number of other companies to follow suit and add that 10 cent per gallon charge for using credit. One of those companies that did followed was Safeway. Notice how the Cash/Debit sign is tacked on. A number of stations in the Seattle area do not charge more for credit so you get a case where paying cash at one station is cheaper but if you want to use credit the station across the street is cheaper since there isn’t a 10 cent premium. As I mentioned elsewhere in the comments there a number of stations in the area that charge more for using a credit card if you buy premium than they do if you buy regular.

      One of the most interesting things I’ve seen concerning the different pricing of cash vs credit was at a station all by itself in the middle of nowhere CA off of I5. They were charging 20 cents per gallon more for credit on regular and mid grade, 30 cents more for premium yet E85 was the same price for cash or credit.

    • 0 avatar
      highdesertcat

      Ron B., charging extra for using a credit card is pretty much the norm everywhere I’ve been across the USA. Ad price is for Cash Pre-pay only.

      Usually 3%-5% more for using the credit card, but 5%-10% discount if using a prepaid card like a Wal-Mart Gift card at a Wal-Mart or Sam’s Club affiliated gas station on their turf. Same for diesel.

      I have a Fleet card for business use, or in vehicles used for business, and that is supposed to give a significant discount (15% IIRC), but since the business pays the bill each month, I don’t rightly know since I don’t keep track of it.

  • avatar
    Mr. K

    Bringing refineries back on line and running refineries at top capacity account for some of the price of oil going up.

    The USA demand for refined fuel is down, and the current low prices will have little long term impact, but the export of US refined product to Europe and Asia may enable continued high refinery output and consequent demand for oil.

    But.

    Oil is priced as a world commodity. It remains to be seen if running US refineries flat out can raise the world price significantly.

    Don’t forget that for each dollar the increased Us demand pushes oil up there will be some loss of demand from elsewhere. No it will not be a one to one relationship, but what that relationship turns out to be is going to be the key to medium term crude prices.

  • avatar
    Poppa Gilley

    Charging extra to use a cc is insane. I guess I lucked out last week when I filled up at a Speedway in Port St. Lucie (FL) at $2.33/gal. Past the same station this morning and it was $2.57!

    • 0 avatar
      Scoutdude

      Why is it insane, the station does not get paid the full amount that you are charged they only get 98% +/- depending on their clearing house, their contract and their volume. Gas is a low margin item, there are way too many convenience stores that price their gas low so you will be likely to come in the store where they make their real money. Buying a cup of coffee, a six pack, candy bar, or pack of cigarettes will net them as much or more profit than 10-20 gallons of regular gas. Making the cash price lower which makes you go into the store only plays into that even more.

  • avatar
    an innocent man

    If you don’t use a credit card to pay, how do you complete the transaction? Do you have to go inside or something?

    • 0 avatar
      Dan

      Yes.

      In the civilized parts of the country you can even pump first and pay afterwards.

    • 0 avatar
      Scoutdude

      Well Arco stations around here have the payment machine where you can insert cash it is also where you go to use your debit or credit card since they do not have a card reader on every pump. The convenience stores really really want you to go inside because inside sales are where they actually make their money.

      • 0 avatar
        highdesertcat

        “The convenience stores really really want you to go inside because inside sales are where they actually make their money.”

        You betcha!

        And they succeed with me. On the Kansas Turnpike I walked out of the Rest Stop with a half dozen Chocolate Covered Boston Cream Filled Dunkin’ Donuts, two large coffees, four bags of different chips and snacks, and two six packs of Coca Cola.

        And that was the early morning breakfast filler-up.

    • 0 avatar
      mcs

      In the Boston Area, there is a chain of gas stations/convenience stores that allows payment by phone app. When you get to the pump, you use the app the activate it. You get to watch the price on the pump drop 10 cents per gallon when you start to pump. When you’re done, they email the receipt to you.

      I suspect the discount comes from the fact that the money comes from your checking account bypassing MC/Visa. You get a 5 cent discount if you use PayPal instead.

      https://play.google.com/store/apps/details?id=com.cumberlandfarms.mobile&hl=en

  • avatar
    S197GT

    has there ever been a time when the refineries weren’t having “issues”?

    they need to upgrade those refineries’ computers to something other than windows ME.

  • avatar
    SCE to AUX

    Hmm. Perhaps a heavily discounted hybrid makes sense for me this fall.

  • avatar
    jimbob457

    Sharp, short-term moves in crude oil prices are almost always the consequence of international political developments – sometimes ones that are not immediately transparent. In recent weeks that pot has definitely been simmering.

    1.The nuke negotiations with Iran may well get torpedoed. No deal. No lifting of sanctions. No need to find room for increased Iranian output.

    2.Open warfare between Arabia and Iran has now become at least a possibility. This would shut in a lot of Gulf oil production.

    3.Egypt’s Al-Sisi has publically offered to take the east Libyan oil fields if the U.S. gives him the weapons he needs (1978 all over again). In public, Obama has said no. Who knows the truth?

    4.Putin may realistically be in a position to spike crude oil prices, probably over Ukraine. He might do it.

    5.The immediate threat to crude oil prices from fracking appears to have been contained. Oil services companies are laying off by the tens of thousands.

    In short, it doesn’t look like the end of the world as we know it, but for the moment the political risk issue and its effect on oil prices is back.

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