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 13, 2017. At the national level, gasoline prices climbed 3.1 cents per gallon, while diesel prices rose by 3.3 cents per gallon. Gasoline prices rose in all PADDs outside of the Midwest PADD 2. Diesel prices rose in all PADDs nationwide.

Product prices continued to rise in tandem with increasing crude oil prices. WTI crude prices rose by $0.77/b last week, and they remain in the range of $56-$57/b—the highest prices since April 2015. There is some debate as to how high prices can go. Even with production restraint by OPEC, Russia and the other countries participating in the production cut agreement, U.S. production is continuing to climb. During the week ended November 3, the EIA reported that U.S. crude production had topped the 9.6-million barrel per day mark. The International Energy Agency (IEA) has concluded that the oil and gas supply surge from the U.S. will beat the largest gains seen in the industry, including the booms achieved in Saudi Arabian oil and Russian natural gas. The IEA cut its forecast of long-term oil prices to $83/b in 2025 (from $101/b,) and to $111/b in 2040 (from $125/b.) The lower prices are expected to strengthen forecasts of oil consumption.

As a reminder, note that PADD 5 prices jumped on November 1st 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 raised the national average as well.

For the current week ended November 13th, diesel prices rose by 3.3 cent to arrive at an average price of $2.915/gallon. Diesel prices have been rising steadily since August.

PADD 1 retail diesel prices increased by 3.6 cents to $2.884/gallon. Within the PADD, New England prices rose by 3.8 cents to average $2.850/gallon. Central Atlantic diesel prices increased by 4.3 cents, to an average of $3.018/gallon. This submarket now joins PADD 5 in having diesel prices above $3/gallon. Lower Atlantic prices rose by 3.1 cents to average $2.795/gallon. PADD 1 prices were 43.1 cents/gallon above their prices for the same week last year.

In the Midwest PADD 2 market, retail diesel prices increased by 2.3 cents to average $2.884/gallon. Prices were 49.7 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 $2.6697/gallon. This price was 38.1 cents higher than in the previous year.

In the Rocky Mountains PADD 4 market, retail diesel prices rose by 2.7 cents to $2.99/gallon. This price was an even 50 cents higher than in the prior year.

In the West Coast PADD 5 market, the new tax laws came into effect on November 1. Last week, retail diesel prices skyrocketed by 22.1 cents to an average of $3.332/gallon. For the current week, retail prices rose by 5.8 cents to reach and average of $3.39/gallon. This price was 63.3 cents above its level from last year. Prices excluding California rose by 4.5 cents to $3.12/gallon, which was 46.3 cents above the retail price for the same week last year. California diesel prices jumped by 6.9 cents to an average price of $3.61/gallon. This price was 77.3 cents higher than last year’s price. PADD 5 remains the only PADD to have diesel prices above $3 per gallon, but other regions are catching up.

 

U.S. retail gasoline prices rose by 3.1 cents for the week ended November 13, to arrive at an average price of $2.592/gallon. Because California’s gasoline market is so large, the new fuel tax there has fed contributed to the increase in the national average price.

For the current week ended November 13, East Coast PADD 1 retail prices for gasoline rose by 6.9 cents to $2.546/gallon. The average price was 32.9 cents higher than last year’s price. Prices increased by 3.7 cents in New England to $2.60/gallon. Central Atlantic market prices rose by 4.7 cents to $2.658/gallon. Prices in the Lower Atlantic market surged by 9.6 cents, to an average price of $2.446/gallon. This was 30.8 cents higher than last year’s average price for the same week.

In the Midwest PADD 2 market, retail gasoline prices eased by 2.1 cents, following last week’s runup of 11.9 cents. Prices averaged $2.525/gallon. Gasoline pump prices were 53.1 cents higher than they were one year ago.

In the Gulf Coast PADD 3 market, gasoline prices rose by 5.3 cents to average $2.302/gallon. PADD 3 has the lowest average price among the five PADDs. Prices for the week were 32.7 cents higher than for the same week in 2016.

In the Rocky Mountains PADD 4 market, gasoline pump prices edged up slightly by 0.4 cents, to average $2.542/gallon. PADD 4 prices were 30.7 cents higher than at the same time in 2016.

In the West Coast PADD 5 market, retail gasoline prices rose by 3.5 cents to average $3.084/gallon. This was 43.9 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 back above $3/gallon. Excluding California, West Coast prices rose by 4.2 cents to an average of $2.756/gallon. This was 30.0 cents higher than at the same time in 2016. In California, prices increased by 3.2 cents, arriving at an average pump price of $3.275/gallon. California prices were 52.0 cents per gallon above their levels last year.