Climbing Gasoline Costs to Push Up U.S. Retail Average

By Brian L. Milne, Refined Fuels Editor, Telvent DTN

Wholesale gasoline costs were mostly higher across major metropolitan markets in the United States for a second straight week, which should reverse the decline in retail prices, while fuel issues impacted drivers in Minnesota and North Dakota earlier this month.

Kwik Trip said 13 of its gas stations received off-specification ethanol gasoline which was delivered from Magellan Midstream’s Mankato distribution terminal in Minnesota over the Oct. 8-9 weekend. The stations were quickly replenished with the proper gasoline blend, with the initial fuel including an ethanol ratio above the 10% maximum.

View Telvent DTN’s Weekly and Historical Gasoline Price Index.

Magellan continued to work on remedying the situation, while taking full responsibility for the fueling issue. Magellan had stopped loading at the Mankato terminal immediately upon discovering the problem. A spokesman with Minnesota Department of Commerce’s Weights and Measures said that 108 stations in 21 different cities were impacted by the error.

Another fueling issue involved Tesoro Corp., which said in a statement on Oct. 14 that the company had cleared up the issue and resumed normal operations at the Mandan refinery truck terminal in North Dakota, the location of the problem.

Consumer complaints of engine performance in the Mandan/Bismarck area starting the evening of Oct. 11 led to the discovery of off-spec gasoline. The fuel was made at the 58,000 bpd Mandan refinery in N.D.

On pricing, two consecutive weeks in which wholesale retail gasoline costs have increased will reverse the decline in retail prices, with the Energy Information Administration (EIA) last reporting the US average for regular grade gasoline at $3.417 gallon as of Oct. 10. That was the sixth consecutive weekly decline in the average and eighth decrease in the past ten weeks, with the average at its lowest point since Feb. 28. The average will be higher by Halloween.

The EIA also cut its expected average price for the retail average for this year by 4 cents to $3.52 gallon, which would be 74 cents higher than in 2010 if realized. For 2012, EIA projects a $3.43 gallon annual average, cutting its previous forecast by 9 cents.

About the author
Brian L. Milne is the Refined Fuels Editor for Telvent DTN—a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for 15 years as an analyst, journalist and editor. He can be reached at brian.milne@telventdtn.com.

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