Last December I wrote about the proposed Transportation and Climate Initiative (TCI), which would require wholesalers of gasoline and diesel in participating states to buy carbon credits to sell their fuel. As a result of the COVID-19 pandemic, the TCI jurisdictions have adjusted their timeline for developing the program, and a final Memorandum of Understanding is now expected in the fall of 2020. TCI notes that work on the program details will continue, as will engagement with stakeholders.
Despite Hurricane Dorian’s effects on the Atlantic coast, both locally and across the nation gas prices are expected to continue to fall as we switch to cheaper winter gasoline.
TRADE WARS! TANKER GATE! IRANIAN SANCTIONS! MIDDLE EAST UNSTABLE! MIDDLE EAST PEACE! VENEZUELA SANCTIONS! INVENTORIES UP! INVENTORIES DOWN! REFINERY OUTAGES! PRODUCTION DOWN! PRODUCTION UP! CRUDE CHASES $50!
CRUDE RUNS UP TO $60!
WHAT DOES IT ALL MEAN?
On March 1st the front month futures gasoline contract closed at $1.74 a gallon. At the time of this writing the contract trades were at $2.03 per gallon, a 14% increase in five weeks. Further pushing physical prices higher is the price differential (Basis) versus the futures which moved $0.07.
Notwithstanding OPEC production cuts, Venezuela sanctions restricting crude supply to the US Gulf Coast driving the market higher, retail gasoline prices are poised to make their annual spring run. Seasonal specification changes in gasoline have a significant impact on price.
The thinly traded holiday gasoline market bottomed out on December 24th with a NYMEX low of $1.2352 per gallon. Here we are a few days into the New Year trading at a high of $1.4146. Here’s what happened to push prices higher.
Good news for those traveling next week. Oil prices have fallen considerably which is impacting gas prices. Currently, the national average gas price is $2.68 a gallon. While this is higher than the price drivers paid last Thanksgiving, the national average was $2.52 a gallon, it’s still lower than this year’s high of $2.97 a gallon last Memorial Day.
The summer grade 7.8 RVP in Pittsburgh, PA gasoline specification requirement expired over the weekend. Now the Pittsburgh market can use the same gasoline specification (Conventional Gas) as most of the state.
Last weekend we all welcomed the month of September, Labor Day celebrations and the unfortunate realization that summer has ended. Though technically the summer doesn’t end until the equinox on September 22nd, the Labor Day weekend traditionally marks the end of summer for schools, as well as the close of the summer driving season.
As summer winds down and eases back into school, football, and cooler temps, less expensive higher Reid Vapor Pressure (RVP) grades of gasoline enter the distribution system.