Analysis by Dr. Nancy Yamaguchi
The Energy Information Administration (EIA) released its weekly data on diesel and gasoline retail prices for the week ended December 11, 2017. At the national level, gasoline prices decreased by 1.5 cents per gallon, while diesel prices fell by 1.2 cents per gallon. Gasoline prices declined in all PADDs except for the Midwest PADD 2. Diesel prices declined in all PADDs.
The drop in retail prices during the week is consistent with a drop in crude prices. WTI prices fell by nearly a dollar per barrel during the week ended December 8. The market was confident in ample supply. US crude production rose again during the week ended December 1, hitting a new record-high 9.7 mmbpd. The highest annual average production ever achieved in the US was 9.637 mmbpd in 1970, according to the EIA. Russian output may soon surpass its agreed-upon ceiling because of gains in the Arctic.
However, retail prices are likely to be higher in next week’s report, which will cover the week ended December 18, if crude prices continue on today’s path. A crack in the Forties Pipeline will shut in a portion (perhaps as much as 25%) of Brent Blend output. The pipeline may be closed for two weeks as repairs are completed. Brent crude futures shot up above $65 upon this news. There also is a threat of reduced supply from Nigeria, as one of the two main unions threatens a strike. Protestors reportedly have stopped work at three wells. WTI crude prices rose above $58/b.
During the week ended December 1, apparent demand for gasoline rose by 171 kbpd, while diesel demand dropped by145 kbpd. The EIA reported that both gasoline and diesel stockpiles grew during the week ended December 1st, with a massive 6.78 mmbbls flowing into gasoline inventories and 1.667 mmbbls added to distillate inventories. Crude stocks were drawn down by 5.61 mmbbls.
For the current week ended December 11th, diesel prices decreased by 1.2 cents to arrive at an average price of $2.910/gallon.
PADD 1 retail diesel prices fell by 0.3 cents to $2.901/gallon. Within the PADD, New England prices rose by 0.3 cents to average $2.90/gallon. Central Atlantic diesel prices fell by 0.2 cents, to an average of $3.060/gallon. This submarket has had diesel prices above $3/gallon for the past five weeks. Lower Atlantic prices decreased by 0.6 cents to arrive at an average price of $2.788/gallon. PADD 1 prices were 38.1 cents/gallon above their prices for the same week last year.
In the Midwest PADD 2 market, retail diesel prices fell by 1.4 cents to average $2.863/gallon. Prices were 41.7 cents/gallon above their level for the same week last year.
In the Gulf Coast PADD 3, retail diesel prices declined by 0.8 cents to average $2.705/gallon. This price was 33.4 cents higher than in the previous year.
In the Rocky Mountains PADD 4 market, retail diesel prices dropped by 2.8 cents to average $2.991/gallon. During the prior three weeks, PADD 4 had been in company with PADD 5 in having diesel prices above $3/gallon. This price was 54.4 cents higher than in the prior year.
In the West Coast PADD 5 market, retail prices fell by 2.9 cents to average $3.344/gallon. This price was 57.2 cents above its level from last year. Prices excluding California dropped by 3.4 cents to average $3.072/gallon, which was 38.2 cents above the retail price for the same week last year. California diesel prices decreased by 2.5 cents to an average price of $3.560/gallon. This price was 72.3 cents higher than last year’s price. PADD 5 is once again the only PADD to have diesel prices above $3 per gallon, with this week’s decline in prices in PADD 4.
U.S. retail gasoline prices decreased by 1.5 cents for the week ended December 11, to arrive at an average price of $2.485/gallon.
For the current week ended December 11, East Coast PADD 1 retail prices for gasoline fell by 2.6 cents to $2.465/gallon. The average price was 20.6 cents higher than last year’s price. Prices dropped by 2.9 cents in New England to $2.546/gallon. Central Atlantic market prices declined by 2.7 cents to $2.589/gallon. Prices in the Lower Atlantic market fell by 2.5 cents, to an average price of $2.348/gallon. This was 16.7 cents higher than last year’s average price for the same week.
In the Midwest PADD 2 market, retail gasoline prices rose by 1.4 cents to arrive at an average price of $2.371/gallon. PADD 2 was the only PADD where retail prices rose during the week, following a significant drop the prior week. Gasoline pump prices were 20.9 cents higher than they were one year ago.
In the Gulf Coast PADD 3 market, gasoline prices dropped by 3.4 cents to average $2.216/gallon. This was the largest price drop among the five PADDs, among which PADD 3 continues to have the lowest average price. Prices for the week were 20.8 cents higher than for the same week in 2016.
In the Rocky Mountains PADD 4 market, gasoline pump prices decreased by 2.0 cents to average $2.514/gallon. PADD 4 prices were 39.2 cents higher than at the same time in 2016.
In the West Coast PADD 5 market, retail gasoline prices dropped by 3.2 cents to average $2.974/gallon. This was 41.8 cents higher than at the same time a year ago. PADD 5 typically has the highest gasoline prices among the five PADDs. Its retail gasoline prices had been back above $3/gallon for four weeks until the past week ended December 11. All five PADDs now have retail prices averaging below $3/gallon. Excluding California, West Coast prices decreased by 1.5 cents to an average of $2.724/gallon. This was 35.6 cents higher than at the same time in 2016. In California, prices dropped by 4.0 cents, arriving at an average pump price of $3.12/gallon. California prices were 45.4 cents per gallon above their levels from last year.