Analysis by Dr. Nancy Yamaguchi

The Energy Information Administration (EIA) released its weekly data on diesel and gasoline retail prices for the week ended November 6, 2017. At the national level, gasoline prices jumped by 7.3 cents per gallon, while diesel prices rose by 6.3 cents per gallon. Gasoline and diesel prices rose in all PADDs nationwide. It was an eventful week for prices, with a surge in global crude prices, plus the launch of California’s tax increase on gasoline and diesel.

Product prices are responding to continued strength in crude markets. WTI crude prices rose by $1.83/b last week, and they now are in the range of $56-$57/b—the highest prices since April 2015. Saudi Arabia’s Crown Prince Mohammed bin Salman continued to raise his profile, evincing confidence in his authority. This weekend, the Crown Prince led a crackdown on corruption that landed several wealthy and powerful countrymen in jail. Some were viewed as potential rivals to his authority. There is some geopolitical risk factored into the price increases, since some believe that the arrests may have been intended to quell instability in the Kingdom. The arrests appear to be affecting nearby countries as well. The market already has been pricing in a continuation of the OPEC production cuts, which the Crown Prince supports. The Crown Prince is known for his support for diversifying Saudi Arabia’s economy away from its dependence on petroleum export revenues.

Note that PADD 5 prices rose on November 1 with the start of the new tax structure. The gasoline excise tax rose 12 cents per gallon, and the diesel excise tax rose 20 cents per gallon. The diesel sales tax rate went from 1.75% to 5.75%. This caused an immediate bump-up in California, and thus PADD 5, prices. Because California is such a large market, the jump in its retail fuel prices has raised the national average as well.

For the current week ended November 6th, diesel prices rose by 6.3 cent to arrive at an average price of $2.882/gallon. Diesel prices have been rising steadily since August.

PADD 1 retail diesel prices increased by 3.7 cents to $2.848/gallon. Within the PADD, New England prices rose by 4.2 cents to average $2.812/gallon. Central Atlantic diesel prices increased by 3.7 cents, to an average of $2.975/gallon. Lower Atlantic prices rose by 3.5 cents to average $2.764/gallon. PADD 1 prices were 37.4 cents/gallon above their prices for the same week last year.

In the Midwest PADD 2 market, retail diesel prices increased by 5.1 cents to average $2.861/gallon. Prices were 43.6 cents/gallon above their level for the same week last year.

In the Gulf Coast PADD 3, retail diesel prices rose by 2.9 cents to average $2.668/gallon. This price was 32.8 cents higher than in the previous year.

In the Rocky Mountains PADD 4 market, retail diesel prices rose by 2.2 cents to $2.965/gallon. This price was 43.3 cents higher than in the prior year.

In the West Coast PADD 5 market, the new tax laws came into effect on November 1. Retail diesel prices skyrocketed by 22.1 cents to an average of $3.332/gallon. This was the largest price hike among the five PADDs. This price was 56.6 cents above its level from last year. Prices excluding California rose by 5.5 cents to $3.075/gallon, which was 40.2 cents above the retail price for the same week last year. California diesel prices rose by 35.6 cents to an average price of $3.541/gallon, a massive 70.1 cents higher than last year’s price. PADD 5 typically has the highest fuel prices in the country, and it remains the only PADD to have diesel prices above $3 per gallon despite the gradual increase in nationwide prices. Other PADDs seem destined to have their retail diesel prices top the $3/gallon mark in coming weeks.

U.S. retail gasoline prices rose by 7.3 cents for the week ended November 6, to arrive at an average price of $2.561/gallon. Because California’s gasoline market is so large, the new fuel tax there has fed into the overall increase in the national average price.

For the current week ended November 6, East Coast PADD 1 retail prices for gasoline rose by 2.9 cents to $2.477/gallon. The average price was 23.7 cents higher than last year’s price. Prices increased by 1.0 cents in New England to $2.563/gallon. Central Atlantic market prices rose by 5.8 cents to $2.611/gallon. Prices in the Lower Atlantic market rose by 1.3 cents, to an average price of $2.35/gallon. This was 18.5 cents higher than last year’s average price for the same week.

In the Midwest PADD 2 market, retail gasoline prices rose strongly during the week, increasing by 11.9 cents to average $2.546/gallon. Gasoline pump prices were 46.4 cents higher than they were one year ago.

In the Gulf Coast PADD 3 market, gasoline prices rose by 3.4 cents to average $2.249/gallon. PADD 3 has the lowest average price among the five PADDs. Prices for the week were 23.4 cents higher than for the same week in 2016.

In the Rocky Mountains PADD 4 market, gasoline pump prices increased by 2.3 cents, to average $2.538/gallon. PADD 4 prices were 27.0 cents higher than at the same time in 2016.

In the West Coast PADD 5 market, retail gasoline prices rose significantly by 12.1 cents to average $3.049/gallon. This was 36.3 cents higher than at the same time a year ago. PADD 5 typically has the highest gasoline prices among the five PADDs, and its retail gasoline prices are now back above $3/gallon. Excluding California, West Coast prices rose by 2.6 cents to an average of $2.714/gallon. This was 23.9 cents higher than at the same time in 2016. In California, prices jumped by 17.7 cents, arriving at an average pump price of $3.243/gallon. California prices were 43.4 cents per gallon above their levels last year.