Tight gasoline supplies on the US East and West Coasts have left both regions vulnerable to potential price spikes at the pump ahead of the peak Summer driving season.
Supplies on both coasts are at seasonal 5-year lows as the Memorial Day Holiday weekend starts, the unofficial beginning of Summer.
The Memorial Day weekend is expected to post the 2nd-highest travel volume on record since the American Automobile Association (AAA) began tracking the volumes in Y 2000.
The current national average for gas is $2.85 a gallon, according to AAA Gas Prices.
The national average climbed 67c a gallon between New Year’s Day and 4 May, when pump prices peaked, according to price-tracking firm GasBuddy. That is the 2nd-biggest rise on record for the start of a year, trailing only the 93c per gallon surge in Y 2011.
California drivers are paying $4/gal, while Americans in neighboring Western states are paying more than $3/gal now.
Nearly 75% of Americans plan to take a road trip this summer, marking an increase from last year, according to a survey by GasBuddy. However, 38% of survey respondents said current gas prices will impact their travel decisions.
The West Coast’s supplies tightened earlier this year due to a combination of refining maintenance, unexpected outages and a falloff in ethanol supplies needed to blend into the gasoline pool due to flooding in the Midwest.
Market participants have been sending supplies there instead of elsewhere as prices rose. California currently is posting the highest prices in the country, at an average of $4.054/gal, according to AAA. The state’s prices have been at their highest seasonally since Y 2014.
West Coast gasoline imports in April were up 62% from the same time last year, according to the director of commodity research at ClipperData.
On the demand side, the Memorial Day weekend is expected to post the 2nd-highest travel volume on record since the American Automobile Association (AAA) began tracking the volumes in Y 2000, it said.
“Both regions will struggle to rebuild stocks in time to meet peak demand,” Energy Aspects said in a note. “At this point, the market will need to run to stand still, leaving it vulnerable to any additional refinery outages.”
Have a terrific Memorial Day weekend.