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Leap in Gas Prices Puts $3 a Gallon in Sight

Leap in Gas Prices Puts $3 a Gallon in Sight thumbnail

The prospect of summer drivers crowding U.S. highways is powering steep gains in the price of gasoline, a sign of economic recovery and a boon for the pandemic-ravaged energy industry.

Lifted by oil’s recovery and growing consumer demand, gasoline prices at pumps in the U.S. hit an average of $2.88 a gallon over the past week, according to the AAA. That marks a 30% increase over this time last year, when the pandemic’s lockdowns slammed fuel usage.

Rising prices are an early season gift for fuel makers including Valero Energy Corp. VLO -3.04% and Phillips 66 PSX -1.99% after a bruising year, helping to make energy shares the top-performing sector this year in the S&P 500. A proxy for profit margins at refiners, calculated from the gap between gasoline and crude-oil futures, recently neared its highest level in three years at more than $24 a barrel.


What is happening with gas prices in your area? Join the conversation below.

Some analysts see further gains ahead. Prices tend to climb closer to summer, when millions of Americans drive to vacation spots and petroleum refiners blend costlier fuel that won’t evaporate in the heat.

Booming gas prices join a recent rally in other commodities such as copper, as well as improving data on jobs and spending, as signals that the economy is gathering momentum. At the same time, elevated fuel prices are biting some consumers and businesses while adding to worries about rising inflation.

Weekly average U.S. gasoline pricesSource: American Automobile Association

.a gallonWEEK OF YEAR20212019201720162018


In Colorado, where gas prices have climbed by nearly 40 cents a gallon over the past month, landscaper and tree surgeon Allan Trujillo is feeling the pinch. Mr. Trujillo drives a 1996 Ford Econoline to work from his home in Arvada and runs fuel-consuming machinery including chain saws and power trimmers. He said he is spending about $100 a week on gas right now, up from around $60 normally at this time of year.

“This just seems a little bit too early in the year” for gasoline prices to rise said Mr. Trujillo, 45 years old. “When we do want to drive out to the locations that are further out it’s definitely going to cost us a little bit more.”

U.S. demand for finished motor gasolineSource: Energy Information AdministrationNotes: Measured by volume of gasoline supplied. Four-week average.

.million barrels a day2019’20’21012345678910

Supporting gasoline’s climb is a rebound in crude-oil prices and a big drop in the amount in storage. The price of West Texas Intermediate crude has advanced by more than 60% since the end of October to $57.76 a barrel Tuesday, even after a recent tumble. Crude accounts for 56 cents of every dollar consumers spend on gasoline, according to the Energy Information Administration.

Refiners throttled back output last year in response to lower prices and weak demand. The winter freeze that struck Texas in February then knocked some of the nation’s biggest out of action. The combination dragged stocks of motor gasoline below normal levels for March.

Now, many observers expect a nascent recovery in fuel consumption to accelerate as restrictions on movement ease. Climbing prices could then encourage refiners to churn out more fuel to meet the surge, analysts said.

Gasoline prices could climb over $3 a gallon, according to an RBC Capital Markets analyst.

Photo: Chet Strange/Bloomberg News

“The market is telling me I need to turn my refinery on and run it as hard as I can,” said Michael Tran, managing director for global energy strategy at RBC Capital Markets. “Can we push north of $3? Absolutely,” Mr. Tran said.

The prospect of a sustained rise concerns Lauren and Peter Long, whose family raises cattle and horses just north of Jackson Hole, Wyo. Come summer, the couple will drive the 35 miles from home to the ranch most days before swapping their Jeep Cherokee and Chevrolet Equinox for beaten-up vehicles to get around their 400-acre plot.

“It’s going to be quite costly,” said Ms. Long, 34.

Price of gasoline crack-spread futures, aproxy for refinery marginsSource: FactSetNote: Price is equal to that of U.S. gasoline futuresminus light, sweet crude-oil futures.

.a barrel

Pandemic lowsApril 2018’19’20’$27.5

Another worry is that the expense of driving into the mountains might deter potential customers from hiring the ranch as a venue for weddings or business events in future seasons. A Long family trip to Yellowstone National Park might be off if prices keep heading higher, Ms. Long said.

Diesel prices also have climbed. That is an unwelcome development for Jerry Boyce, owner of Nampa, Idaho-based Hallmark Construction Inc. Mr. Boyce drives trucks up to 250 miles to building sites and said his monthly fuel bill is now about $4,000, up from $3,000 in the fall.

“That little dollar adds up really fast,” said Mr. Boyce, 44. Hallmark has taken the hit from higher diesel prices so far but will charge customers more if they remain elevated, he added.

Your Money Briefing

Gas Prices Keep Rising. Is There Any Relief in Sight?

U.S. gasoline prices are up 30% from a year ago. Markets reporter Joe Wallace joins host J.R. Whalen to explain what is behind the price surge and whether motorists can expect prices to ease any time soon.

Analysts are gauging whether consumers will respond to higher gasoline prices by cutting down their driving. In a 2019 survey, 44% of respondents said they would change their habits if prices rose to $3 a gallon, according to Jeanette Casselano McGee, a spokeswoman for the AAA.

Many observers expect drivers will be less sensitive to prices this year as pandemic restrictions lift.

“People are fatigued by lockdowns and they’re desperate to get out,” said Regina Mayor, global head of energy at KPMG. Still, she thinks March could see the highest prices of the year because refiners are set to kick into action to replenish supplies.

Another factor that could keep a lid on gasoline prices: Many Americans are either working from home or unemployed, crimping gasoline demand from commuters.

Many observers expect a nascent recovery in fuel consumption to accelerate as pandemic-related restrictions on movement ease.

Photo: octavio jones/Reuters


9 Comments on "Leap in Gas Prices Puts $3 a Gallon in Sight"

  1. makati1 on Wed, 24th Mar 2021 4:24 pm 

    GOOD! The price of gasoline here in the Philippines has been between $4 & $5 per gallon since at least 2008 when I moved here. That is a day’s wages for a laborer.

    $5+ gas will slow pollution and make people think before they drive to McDonalds for a ratburger.

    And, no Cloggie, it will not sell more EVs.

  2. Cloggie on Thu, 25th Mar 2021 2:10 am 

    Too much solar electricity in Australia, grid can’t cope:

    “Australians could be charged for exporting energy from rooftop solar panels to the grid”

    Luxury problem. Solution: local, decentralized storage. Every home a 10 kWh battery, which is becoming affordable with battery prices currently at $100/kWh (and $60 by 2025). Furthermore, municipalities should consider investing in electrolyzers to produce hydrogen locally.

    Gasoline price in the Netherlands:

    €1,845 (=$8.25 per gallon, three times as high as in the States, resulting in much less frequent SUVs in Europe)

    Good! The higher the better, which puts extra pressure on European society to get on with the transition (and capture all the industries and patents). Wind and solar are long the cheapest form of energy, if you ignore storage, but that problem will be solved soon.

    “And, no Cloggie, it will not sell more EVs.”

    Makati and facts, a match made in

    “Europe leads EV growth as US market slumps”

    And the reason is precisely the scarcity of fossil fuel and high prices in Europe and the abundance of cheap offshore wind.

  3. Cloggie on Thu, 25th Mar 2021 6:09 am 

    Bloomberg, the best brains the US has on offer regarding energy (and you have to look really good), gets it:

    “Integrated European Majors Lead on Preparedness for a Low-Carbon World Among 39 Global O&G Companies”

    European oil companies, including Total, Galp, Equinor, BP and Royal Dutch Shell lead a group of the 39 most publicly-traded oil and gas companies in preparedness for a low-carbon world, according to Bloomberg’s Climate Transition Scores. These companies have ranked highly due to ambitious climate targets and deep transition-related investments in an industry heavily exposed to transition risks in the face of widespread climate action. For example, these five oil majors own some 11GW, or 78%, of the renewable energy assets held by the 39 scored companies.

    For the hundredth time, history teaches that: he who masters a new source of energy first, will be the geopolitical top-dog for the next 100 years.

    That applied to the…

    17th Dutch century (wind)
    19th British century (coal-steam)
    20th American century (oil & gas)

    …or the Three Anglo Empires:

    “What Comes After the Three Anglo Empires?”

    Energy is a multiplier of human labor.

    The integrated, deep renewable energy policy of the EU will guarantee that Europe, as an integrated political entity, can hope for planetary pole position, after empire.

    America could in principle compete with Europe on renewables, but it is addicted to waste its engineering talent on weapons systems, anachronistic carriers and what not in order to pursue an unattainable goal: ram everybody into their Washington-New York-centered (((NWO))), a project that is going to fail majestically.


  4. Cloggie on Thu, 25th Mar 2021 8:03 am 

    For the first time in history, the renewable share (43%) in UK electricity generation was larger than the fossil fuel share (38.5):

    “Renewable Energy Outperforms Fossil Fuels in UK”


  5. ANAL REAPER on Thu, 25th Mar 2021 10:05 am 

    Joe Biden is a rapist and Harris is a fucking slut.

    I pray they both get raped in their lives anally and orally.


  6. ANSEL RAPIST supremaicst muzzies lovin on Thu, 25th Mar 2021 10:12 am 


    supremaicst muzzies offed 10 whiteys, mostly (((supertards))) and one cop

    cops love supremacist muzzies more

    we’re all friends here, we are muzzies lovers

  7. lo allah made supremacist muzzies best of humanity kafir are lower than amails on Thu, 25th Mar 2021 10:22 am 

    muzz offed ten whiteys mostly (((supertards)))
    and cop
    cops love supremacist muzzies more

    (((supertards))) want moar gun grab

    “kill them wherever you find them” (Qur’an 2:191, 4:89, cf. 9:5)

  8. FamousDrScanlon on Thu, 25th Mar 2021 10:54 pm 

    Welcome to the supply-side shock

    “Ordinarily, a giant container ship as long as the Empire State building is high, blocking the southern stretch of the Suez Canal, would have been the lead story on every news channel. Around ten percent of the world’s seaborne oil goes through the Canal; some 3 to 4 million barrels of oil per day – most of it moving north to Europe. Along with the Straits of Hormuz and the Bab al-Mandab Strait at the southern end of the Red Sea, the Suez Canal has been a major concern to security services tasked with preventing terror attacks. This is precisely because of the impact on oil movement that the stranded MV Ever Given is now having. More than 100 vessels are now at anchor in the Red Sea and Mediterranean Sea at either end of the Canal, together with a further 35 in the Great Bitter Lake in the centre of the Canal.”

    ‘The situation can only worsen as it may be well into next week before the ship can be re-floated. As Sally Nabil at the BBC reports:

    “The suspension of navigation through the Suez Canal has created an atmosphere of uncertainty. No-one knows exactly when things will go back to normal. The canal is congested. Dozens of ships are waiting to resume their journeys.’

    One reason why the establishment media may not be treating the incident seriously is because they are heavily invested in the “peak oil demand” fairy tale; and may actually believe that oil is no longer a strategic resource. If that is so, they may be in for a rude awakening in the coming weeks if the movement of goods – including food – is impacted.

    clog’s bought the establishment media’s fairy tales.

  9. Biden's hairplug on Fri, 26th Mar 2021 1:26 pm 

    “City of Oakland Mayor is branded racist for giving families of color $500 a month if they earn under $59,000 with no rules on how they spend it – but offering poor white families nothing”

    I leave it to you as an exercise to figure out the ethnic background of the good mayor.

    Now don’t sneak!

    If you can’t answer that question right away, you’re a real beginner in understanding all things American.

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