Gas prices to rise a bit more, energy agency says

Posted: February 26, 2013

The increase in gasoline prices at this time of year has become a perennial rite of late winter, as predictable as crocuses pushing up in the garden.

But this year's price increases have come faster and quicker than last year's. The average retail price for regular gasoline has risen 45 cents per gallon since the start of the year, according to the U.S. Energy Information Agency. EIA said Monday that East Coast prices moved up a nickel in the last week, to $3.799 a gallon.

In the last month alone, prices are up in the Philadelphia region 31 cents, to $3.78, according to AAA Mid-Atlantic. In southern New Jersey, customers have seen a 9 percent increase, to $3.62.

Analysts anticipate prices will move a little higher, though there are indications the rate of increase is slowing. The price of crude oil, which makes up most of the cost of motor fuel, has softened in recent weeks.

Gasbuddy.com expects prices nationwide to top out at $3.80 to $3.90 a gallon in April, but they could exceed the $4 psychological threshold in Philadelphia. They have already surpassed $4 in Washington.

"Four dollars a gallon is when people really look to curtail their driving," said Greg Laskosky, a senior petroleum analyst with Gasbuddy.com.

Gasoline prices tend to move up at this time of year because refineries are shifting production from winter-formula fuel to the summer blend, which is less volatile and also more expensive to produce.

During the changeover, refineries often plan maintenance outages, reducing production capacity. EIA said crude units were reported to be down at two big refineries in the region, Monroe Energy's Trainer refinery and Philadelphia Energy Solutions' Philadelphia refinery.

EIA suggests that much of the increase this year is attributed to growth of the "crack spread," the difference between the crude-oil price and the market price of refined fuel.

According to EIA, crack spreads were very low going into 2013, and in some cases negative. (A barrel of Brent crude was actually worth more than a barrel of gasoline.)

East Coast refiners are operating at only 72 percent of capacity, according to Laskosky. Even though Hess Corp. plans to close its 70,000-barrel-per-day refinery in Port Reading, N.J., at the end of this month, there is sufficient ability to meet market demand.

It just depends on the price.


Contact Andrew Maykuth at 215-854-2947, @Maykuth or amaykuth@phillynews.com.

 

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