US regular gasoline prices on Monday, April 27, were $2.57 per gallon. This represented an increase of 3.4% from $2.485 per gallon the previous Monday, April 20. It was a decline of ~31% from last year’s level.
The EIA (U.S. Energy Information Administration) releases gasoline fuel price updates every Monday. These prices are national averages calculated by the EIA.
An increase in gasoline prices is a positive for the margins of refiners such as Valero Energy (VLO) and Marathon Petroleum (MPC), which makes up 2.1% of the iShares Global Energy ETF (IXC). Gasoline prices also positively affect refining MLPs such as Northern Tier Energy (NTI) and Calumet Specialty Products Partners (CLMT).
Gasoline prices are also impacted by gasoline inventory levels, which in turn are determined by supply and demand trends. Read Gasoline Inventories Declined in the Week Ending April 17 to know more about that week’s trends.
Gasoline price trends
Lower crude prices are the main reason for the slump in gasoline prices. Prices fell below $3 per gallon in November last year for the first time in four years. In January 2015, prices touched $2.04 per gallon, the lowest since April 6, 2009.
However, as the graph above notes, prices have recovered since then and have been rising. But they remain lower than the year-ago levels. They averaged $2.46 in March.
Gasoline price forecasts
According to the EIA’s Short-Term Energy Outlook (or STEO) report released on April 7, the onset of the summer driving season from April to September will contribute to an increase in US regular gasoline retail prices from an average of $2.46 per gallon in March to $2.50 per gallon in April, which is forecast to be the 2015 peak.
For the full year, the EIA is forecasting prices to average $2.40 per gallon. Prices averaged $3.59 per gallon in the summer of 2014. At these low prices, the EIA expects average US households to spend $700 less this year compared to last year.
Gasoline consumption in 2015
Lower prices have also boosted the EIA’s demand outlook. For the summer of 2015, it expects consumption to average 9.2 MMbbl/d (million barrels per day). That’s 0.14 MMbbl/d higher than last summer.
The EIA also revised its gasoline consumption growth figure upward for 2015 by 70,000 barrels per day (or bpd) to 150,000 bpd in 2015. That’s a 1.6% increase over 2014’s consumption.
In the following part, we’ll look at the latest developments in diesel prices.