During the past week the average price of gasoline in the U.S. increased 5 cents. Gas prices reached $2.26 on average, bringing that 27-day average price to $2.72.
The largest increase was seen on the West Coast region, seeing a 10 cent increase. Prices reached $2.45, making the region one of two regions with the highest gas prices. The Central Atlantic region also saw gas prices reach $2.45 after seeing a 6 cent price increase.
Washington state also saw a 10 cent price increase. With gas prices reaching $2.38 in Washington, the state comes in with the second highest gas prices. New York state still has the highest gas prices, with prices coming in at $2.44.
Even as oil prices remain low at below $50 barrel (U.S.), wholesale North American petroleum prices have risen sharply since late January, filtering through to retail pump prices. Average Canadian retail gasoline prices bottomed out at 91.3 cents a litre on Jan. 20, according to Natural Resources Canada. Since then, they’ve climbed about 13 per cent.
The cold weather has resulted in temporary shutdowns for a number of facilities in the U.S. northeast, according to Dan McTeague, an expert on Canadian and U.S. gas prices. “There’s no scarcity of oil at the moment but there is for gasoline in certain markets,” McTeague, who helps operate price-tracking site gasbuddy.com, said by phone.
“This cold weather has stopped a lot refineries in their tracks. A refinery needs oil,” McTeague said, referencing a facility near Philadelphia that processes 300,000 barrels of oil into gas each day but is temporarily offline.
He said unseasonably cold temperatures have created logjams along the river leading to the facility. “A barge can’t get through a frozen river.”
McTeague said some refineries at this time of year also begin maintenance duties undertaken before they switch over to summertime petroleum, which includes changing up processes to include additives that mitigate emissions.
Prices in Canada are being exacerbated by three factors above and beyond supply constraints, McTeague said.
The first is the Canadian dollar, which has weakened a further 5.5 per cent since mid-January against the U.S. greenback, lifting imported fuel costs in recent weeks.
Government taxes also amplify the jump in prices for end-users, since HST and other taxes collected in each province are a fixed percentage of the pre-tax price.
Charging 13 per cent tax on a $0.80/litre wholesale price compared to $0.90 cents for example amounts to a 1.5 cent/litre difference in the final cost. “As gas prices go up, [taxes] tend to magnify the [cost] to consumers,” McTeague said.
Gas distributors have also started to inflate profit margins again. “Gas was selling without any retail margin, often even below cost” last month, McTeague said. “There was a gas war that took place that brought prices down.”
With tightening supplies now, Canadian gasoline suppliers are once again raising prices, he said.
Looking at the futures market for North America wholesale gasoline, motorists who thought sub-$1 gas was here for awhile will be disappointed. Prices appear poised to rise a further six to seven cent per litre beginning next week as the unseasonably cold temperatures stick around into March.
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