Wholesale Jump

Brian L. Milne, Refined Fuels Editor, DTN

Retail gasoline prices along the West Coast will move higher during the holidays, climbing in front of Christmas due to a jump in wholesale prices of the fuel after gasoline production in California was unexpectedly lost in mid to late December because of mechanical problems at oil refineries.

Gasoline production in California, and for that matter across the country, has been reduced because of poor economics, with unexpected repairs exacerbating the lower gasoline output that forced prices wholesalers had to pay higher.

Higher gasoline prices for the West Coast are, however, bucking a trend elsewhere in the U.S. for lower pump prices led by a decline in crude prices to a more than 4 1/2 year low. Crude prices tumbled to their lowest level since Feb. 2, 2004 on Dec. 19, with crude oil making up the largest cost component for gasoline.

View DTN’s Weekly and Historical Gas Prices

The sell-off in crude kept a lid on gasoline prices in wholesale markets along the Rocky Mountains and east to the Atlantic Ocean. The declines in most wholesale markets were less than 10 cents a gallon, a precursor to smaller decreases in retail gasoline looking ahead.

There remains additional pass-through savings for consumers, but that is slowing absent a further decrease in crude prices and in gasoline in wholesale markets.

According to the Energy Information Administration (EIA), regular grade gasoline sold at retail outlets across the country averaged $1.659 gal as of mid-December, $1.339 less than during the same period in 2007, and its lowest average since Feb. 16, 2004.

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 brian.milne@dtn.com.


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