American consumers hoping to squeeze in one last trip before the Labor Day holiday and the start of school are facing the highest gasoline prices of the year due to tightening supply.
In the past, fuel costs in the U.S. would often see a seasonal decline as the summer travel peak waned. However, data from the American Automobile Association indicates that this year, due to strong demand and refinery shutdowns among other factors, U.S. fuel costs remain elevated. As of this Tuesday, the national average retail price of gasoline has risen to $3.86 per gallon, a 7% increase from a month ago. Specifically, in California and Washington State, gasoline prices have soared to over $5 per gallon.
Last week, gasoline retail prices in Ohio and Michigan in the U.S. Midwest rose by 21 cents and 16 cents per gallon respectively, due to an Indiana refinery entering its maintenance period ahead of schedule. Analysts at Goldman Sachs predict that the national average retail price of gasoline in the U.S. will reach $3.90 per gallon this month.
The Irving Oil refinery in Canada, with a daily output of 320,000 barrels, and the Irving Oil refinery in Pennsylvania, with a daily output of 185,000 barrels, are expected to undergo maintenance for most of September and part of October, affecting about 9% of the product supply in their respective regions. Patrick De Haan, head of petroleum analysis at GasBuddy.com, stated that fuel prices typically see an increase at this time of year due to the seasonal peak in oil usage and refinery maintenance.
U.S. government data shows that gasoline inventories this month dropped to 216.4 million barrels, marking the fifth decline in six weeks. Throughout this year, U.S. weekly gasoline inventories have constantly been below the five-year average. If refinery maintenance leads to supply disruptions or decreases, significant increases in fuel prices, including gasoline and diesel, are anticipated.
Meanwhile, extreme weather also poses a threat to the U.S. fuel supply. Last Friday, the National Oceanic and Atmospheric Administration (NOAA) raised its forecast for storms. Extreme weather each summer can damage or shut down U.S. refineries, especially those along the Gulf of Mexico. On Sunday, Goldman Sachs noted that extreme weather could lead to a 2% decline in U.S. refiners' output of petroleum products.
