Explainer-Why are fuel prices rising again in some U.S. regions?

© Reuters. A gas pump is inserted inside an Audi vehicle at a Mobil gas station in Beverly Boulevard in West Hollywood, California, U.S., March 10, 2022. REUTERS/Bing Guan

By Laura Sanicola

(Reuters) – After a tumultuous year, U.S. gasoline prices have been steadily falling from peaks reached in June due to high demand and tight global refining supply. But in some regions, the average price is beginning to rise again, prompting concern from the Biden administration.

Although 60% of U.S. states saw gasoline prices fall week on week, the national average gas price increased by about 7 cents per gallon in the same period, according to data from the American Automotive Association.

Last week top White House officials met with oil executives to discuss Hurricane Ian and low gasoline inventories as President Joe Biden warned the industry not to price-gouge consumers.

Why are gasoline prices rising in some regions?

Gasoline prices have recently been affected by regional refinery outages in the west coast and the Midwest.

Refinery maintenance often takes place in the fall when demand drops after the summer driving season. This fall, however, other refineries had to shut units without warning due to infrastructure problems.

Three refineries in Washington state and California have had planned maintenance while another had an unplanned outage in September, according to Refinitiv data and refining sources.

Overall, U.S. oil refiners are expected to have about 1.5 million barrels per day (bpd) of capacity offline for the week ending Oct. 7, decreasing available refining capacity by 288,000 bpd, research company IIR Energy said on Monday.

In the Midwest, BP-Cenovus’ Toledo refinery is still offline after a fatal explosion shut the plant late last month. On the East Coast, Irving Oil’s Canadian refinery had maintenance this fall, according to refining sources.

Gulf Coast refineries are also undergoing maintenance this fall, including Marathon’s Galveston Bay, Motiva’s Port Arthur refinery, and Pemex Deer Park.

Where are gasoline prices rising and where are they falling?

Gasoline price spikes are most pronounced on the West Coast.

Average retail gasoline prices rose the most in California, rising 10% week on week to $6.382 per gallon, and Alaska, rising by 11% to $5.34, according to AAA.

Prices have also increased by 11 cents in Ohio and 18 cents in Illinois due in part to the Ohio refinery fire.

Fuel prices fell the most in Florida, where demand was impacted by Hurricane Ian. The average price is now $3.22, down 16 cents from a week ago. Gasoline prices also fell week on week in other states including Missouri, Nebraska, New York, and South Dakota.

What other factors are affecting fuel prices?

Tight refining supply has caused the gap between wholesale gasoline futures and retail prices to remain wide this year. It currently sits at about $1.30 a gallon, compared with an average of 88 cents over the past five years.

To combat high prices, California air pollution regulators allowed refiners and retailers throughout California to immediately sell winter-blend fuel, normally not available until Oct. 31.