Oct 6, 2012 No Comments ›› Chuck Biscuits
Excerpted from CNBC: Retail gasoline prices, already at the highest levels on average since July 2008, are likely to continue to climb this month as refinery and pipeline problems overshadow weakness in U.S. consumer demand.
On Wednesday night, a fire broke out at Exxon’s [XOM 92.55 0.33 (+0.36%) ] Baytown, Texas refinery, a 584,000 barrel per day facility that is the largest operating refinery in the U.S.
Exxon said there may be “some impacts to production” from the fire, but the plant will resume normal operations. A partial shutdown of the Colonial Pipeline, the nation’s largest oil product pipeline, also contributed to supplies fears, as it impacted the portion of the line carrying gasoline from Atlanta to Nashville.
“It will only take another refinery issue and a bit more of geopolitical noise to have the first U.S. election at a US average gasoline price of $4 a gallon,” says energy analyst Olivier Jakob of Petromatrix. (Read More: Gas Prices Jump Up to 20 Cents Overnight in California)
The national average for regular unleaded is now at $3.79 a gallon, basically on par with where pump prices were last Friday.
Yet that masks the volatility in the gasoline futures [RBCV1 2.9525 0.0096 (+0.33%) ], and especially some wholesale markets. Gasoline futures prices dropped 30 cents after the expiration of the previous month’s contract, reflecting the seasonal shift among many refiners from summer-grade gasoline to a cheaper winter-blend.
On Wednesday morning, the EIA reported a sharp drop in gasoline demand versus a year ago — leading futures to fall to the low of the week. But prices quickly recovered after the fire at the Exxon Baytown refinery. (Read More: Fire Hits Diesel Hydrotreater at Exxon Baytown Refinery)
And then there are pockets of the country where the supply crunch is more pronounced.