Wholesale Gasoline Costs on the Decline

Brian L. Milne, Refined Fuels Editor, Telvent DTN

It’s mid-October and wholesale gasoline costs are on a downtrend, with the decline delayed based on gasoline’s seasonal tendency to begin moving lower after Labor Day as holiday travel cuts vehicle miles traveled. Gasoline prices are also coming down from lofty heights not usually experienced this time of year, and remain vulnerable to another advance should refinery disruptions again surface en mass.

Record gasoline prices in California’s wholesale market are also sliding, as the state allows for winter fuel to be sold earlier than the Oct. 31 regulatory timetable, boosting supplies for the state by as much as 10% according to an assessment from the California governor’s office. The price spike has prompted a string of lawmakers to seek probes on what drove the price of California’s unique blend to record highs, while acknowledging a string of unexpected refinery outages amid low supply heading into the seasonal transition from costly summer grades to winter grade formulas.

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

A tight gasoline market in the New York Harbor region is also easing, as the Trainer refinery near Philadelphia, now owned by a subsidiary of Delta Air Lines, is again making gasoline while Irving Oil’s St. John refinery in Canada, which ships most of its gasoline output to the US Northeast, was slated to come back online over the weekend.

Crude oil prices have rallied and then retreated, as a growing Syrian conflict inflates the risk premium in oil prices while concern over global economic growth triggers sell offs. Earlier this month, the World Bank and the International Monetary Fund downgraded the world’s expected economic expansion rate. However, downgrades have triggered monetary stimulus efforts in the United States, Europe and China, with China again seen acting to spur slowing economic growth in the world’s second largest economy and second largest consumer of oil.

The decline in wholesale gasoline costs will gradually filter through the supply chain to lower retail fuel prices. However, the pain suffered at the pump will linger longer for some communities whipsawed by regional outages and unique gasoline specifications.

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 16 years as an analyst, journalist and editor. He can be reached at brian.milne@telventdtn.com.

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