By Brian L. Milne, Refined Fuels Editor for DTN
Retail gasoline prices will be mixed across the U.S. this week, with some parts of the country expected to see a decline in pump prices after wholesale values made a sharp drop last week. However, the one, two punch by hurricanes Gustav and Ike have impacted the supply chain, depleting stockpiles and limiting delivery on the country’s pipelines that move the vast amount of gasoline consumed by the country.
As a result, some regions of the U.S., namely in the Southeast, parts of the Midwest and along the Atlantic coastline could see a limited decrease or even an increase in retail prices.
Additionally, while down sharply, wholesale gasoline prices did move higher late last week and are extending the advance into Monday’s trading. Should this continue, retail gasoline prices could freeze near current levels or move higher.
The gasoline shortages in some wholesale markets have triggered the Environmental Protection Agency (EPA) to issue additional fuel waivers during the week following Hurricane’s Sept. 13 landfall, with the waivers temporarily easing environmental specifications for fuels in parts of the country that experience a greater level of pollution than allowed under the ozone requirement found in the Clean Air Act.
In these parts of the country, which account for roughly 35% of all gasoline sales in the U.S., a special fuel referred to as reformulated gasoline must be sold. The EPA waived the RFG requirement in Virginia, Texas, Maryland, Kentucky, and the District of Columbia that allows any gasoline to be sold there after the states requested the waivers because of low levels of gasoline supply.
On Sept. 15, the Energy Information Administration, which is the statistical division of the Department of Energy, said the average price of regular grade gasoline for the country had spiked 18.7 cents to a $3.835 gallon six-week high.
The price jump, triggered by the twin effects of hurricanes Gustav and Ike snapped a nine-week decline in the average leading up mid-September, with the average $1.048 gal above the same week in 2007.
About the Author Brian L. Milne is the Refined Fuels Editor for DTN—a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for nearly 14 years as an analyst, journalist and editor. He can be reached at firstname.lastname@example.org.