SOUTH PORTLAND, ME and WASHINGTON – A new report on gas, diesel, and oil prices from Wright Express (WEX) says gas and diesel prices are likely to keep climbing during the next couple of months. Retail gasoline will sell between $3.50 and $3.75 per gallon by mid-March. The national average is currently $3.48 for retail gasoline. The company expects diesel prices at the pump to get close to $4 per gallon before the end of February.
The U.S. Energy Information Administration’s Short Term Outlook agrees with WEX’s report, saying it expects regular-grade retail gasoline prices will average $3.55 per gallon in 2012, compared with $3.53 cents per gallon last year. The EIA expects prices to average $3.59 per gallon in 2013 (based on current conditions). Price data from recent options and futures indicate a 25% chance the U.S. average pump price of regular gasoline could exceed $4 in June, according to EIA.
One of the driving forces behind rising gasoline prices is speculation, according to WEX. The company said hedge funds and commodity pool managers believe that refinery closures in the North Atlantic will cause price spikes in March and April. Retail gasoline prices have increased by 28 cents per gallon since winter began. WEX says this is unusual in January and February, especially in light of the fact that gasoline demand is at its lowest level since January 2000, and aggregate petroleum demand is at its lowest since May of 1999.
Diesel prices are moving upward as crude oil prices rise, but a very cold winter in Europe has sent wholesale diesel prices to roughly $3.17 per gallon at the pump. In addition, WEX still sees solid export demand for diesel fuel on the U.S Gulf Coast.
WEX said one other major factor affecting gas and diesel prices is regional refinery operation costs. The company stated that coastal refiners in California, Washington, New Jersey, Delaware, Texas, and Louisiana are seeing crude oil costs of up to $120 per barrel.
Below is a chart from WEX that shows recent fuel price trends for gasoline and diesel.
