API Chief Economist John Felmy has argued that crude oil prices have been by far the largest contributor to rising gasoline prices in California and across the US. He said that refineries are producing record amounts of gasoline, which is more than enough to meet domestic demand.
‘The single biggest factor in today’s higher gasoline prices is the rising cost of crude oil. It has driven the rise in gasoline prices. US refineries are working hard to supply US markets, and there is adequate supply to meet demand. Gasoline production is at a high level and inventories are above the five year average.
‘In fact, weak demand for gasoline has kept prices at the pump from rising as much as crude prices. Brent crude oil prices have risen 45 cents per gallon since the beginning of July and WTI crude prices have risen 37 cents, but retail gasoline prices in California have increased only 29 cents. Nationwide, retail gasoline prices have increased only 35 cents per gallon.
‘Crude oil prices are up because of supply and demand. World demand for crude is increasing as the economies of the world begin to recover, and the world’s excess oil production capacity is not keeping up. Buyers of crude oil are also concerned about the instability of major oil producing nations in the Middle East.’
Adapted from press release by Joe Hester