US regular gasoline prices on Monday, April 20, were $2.485 per gallon. This was an increase of 3.2% from $2.408 per gallon last Monday, April 13. It was a decline of 67.5% from the levels last year.
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 positive for refiners’ margins, like Tesoro (TSO). TSO accounts for 2.2% of the Energy Select Sector SPDR ETF (XLE). Increase gasoline prices are also positive for refineries’ MLP (master limited partnership) subsidiaries that carry refined products. Tesoro’s MLP subsidiary is Tesoro Logistics (TLLP). Other MLP subsidiaries include Phillips 66 Partners (PSXP) and Shell Midstream Partners (SHLX).
Gasoline prices are also impacted by gasoline inventory levels—determined by supply and demand trends. Read Gasoline Inventories Returned to Downtrend Last Week to learn more about last week’s trends.
Gasoline price trends
Lower crude prices are the main reason for the slump in gasoline prices—compared to a year ago. For the first time in four years, prices fell below $3 per gallon in November last year. In January this year, prices touched $2.04—the lowest since April 6, 2009.
However, as the above graph shows, prices recovered since then and have been rising. Prices remain lower than the levels last year. They averaged $2.46 in March.
Gasoline price forecasts
According to the EIA’s STEO (Short-Term Energy Outlook) 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. Prices will increase from an average of $2.46 per gallon in March to $2.50 per gallon in April. This is forecast to be the 2015 peak. For the full year, the EIA is forecasting that prices will 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
The lower prices also boosted the demand outlook. For the summer of 2015, the EIA expects consumption to average 9.2 MMbpd (million barrels per day). This is 0.14 MMbpd higher than last summer.
In the recent STEO, the EIA revised its gasoline consumption growth figure for 2015 upward by 70,000 bpd (barrels per day) to 150,000 bpd in 2015—a 1.6% increase over the consumption in 2014.
In the next part of this series, we’ll look at the latest developments in diesel prices.