The average price for regular gasoline in Vancouver was $2.54 a gallon Thursday, AAA Oregon/Idaho reported. That’s up from $2.50 on Tuesday and $2.41 one week ago.
AAA auto club reported Tuesday that the average price of gas in Washington is $2.44. That’s up 10 cents in a week and 25 cents in a month. It’s 14 cents higher than the national average. But it’s 95 cents lower than the price of gasoline in Washington a year ago.
MILWAUKEE — As spring approaches, gasoline prices will rise.
Bet on it.
Fuel prices always rise this time of year. During 18 of the past 20 years, the retail price of gasoline in the United States has been higher in April than it was in January, U.S. Energy Information Administration figures show.
“It’s one of the more reliable seasonal tendencies in commodities,” said Jim Ritterbusch, who is president of Ritterbusch and Associates, an oil market advisory firm in Chicago. He has followed energy markets for more than 30 years.
But this year, the gasoline market is a mess, according to the folks at gasbuddy.com, who warned Thursday of price spikes at gas pumps across the nation in coming weeks.
“Wednesday brought a big price rally in gasoline markets and gasoline wholesalers are seeing huge increases,” Patrick DeHaan, senior petroleum analyst for GasBuddy, said in a statement. “Wholesale prices today alone have increased coast to coast from 10 to 27 cents per gallon; and when you add that on top of the increases that occurred earlier this month, it’s inevitable that retail prices will climb aggressively in weeks ahead.”
This is all happening as the world is awash in so much oil, we are running out of places to put it. The supply far outstripping demand will eventually drive prices lower once summer comes, forecasters say.
The problem is, you can’t pump crude oil directly into your gas tank. It has to be refined. And refineries are in a bit of disarray right now.
There have been “significant operational issues” at refineries in five states, gasbuddy.com says, some of it due to cold weather — the process of refining crude oil requires heat — and some of it due to equipment breakdowns, including an explosion at a refinery in Torrance, Calif., on Feb. 18.
The BP refinery in Whiting, Ind., which is a major supplier of fuels to Chicago and Milwaukee, has had two operational problems so far this week.
Meanwhile, the United Steelworkers Union went on strike Feb. 1 at 12 refineries in California, Texas, Louisiana, Indiana, Kentucky and Ohio.
Refinery problems aside, the price of gasoline goes up every year at this time, as refiners switch over to warm-weather blend gasolines that are required to meet federal clean air mandates.
The situation is reflected in futures contracts — financial instruments in which buyers lock in prices for commodities that will be delivered at some point in the future.
“Every time you get this rollover from March futures to April futures, you immediately get as much as a 20 cent price pop in the nearest futures contract, and we’re going to see it again,” Ritterbusch said.
“It costs the refiners more to produce the summer-grade product, and they have always been very successful at passing that along to the wholesalers, who in turn pass it along to the retailers, who in turn pass it along to the consumer,” Ritterbusch said.
Another factor is that crude oil prices have managed to plateau and even regain ground from their big slide in late December and January.
“With crude holding up better than most people had anticipated, it looks to me like we are going to see a further lift up in retail pricing across April,” Ritterbusch said.
The good news for consumers is it won’t last.
“By May, or Memorial Day at the latest, the oil market begins to crash against the ‘storage barricade’ as I call it,” Ritterbusch said.
That’s the point at which the supply of oil goes so far beyond demand, that retail prices fall.
Until then, expect to pay more at the pump.
“Timing-wise, it could take another six to eight weeks for that scenario to play out,” Ritterbusch said.
