It’s been just over a month since my last post on oil and gas prices, March 1st Finds Gas Prices With a Slight Uptick but Still Under Pressure. While gasoline prices have been on the upturn this past month, rising from $1.817 to $2.044, other factors have an impact on today’s pump prices.
For starters, many refineries across the U.S. are undergoing some form of maintenance as they perform routine repairs and/or change-out equipment to produce fuel blends for the upcoming summer driving season. This maintenance typically occurs between March and late-May.
Here’s some good news, especially for those of us living in the desert southwest! The ExxonMobil refinery in Torrance, CA that suffered an explosion in its electrostatic precipitator (ESP) has been given the green light to start-up again by the South Coast Air Quality Management District. Bringing the refinery back online will add back the 1 million barrels of gasoline per week that have been removed from the region’s supply.
In addition to the above, the 155,800 barrel per day (b/d) refinery in Torrance was sold to PBF Energy in the 4th quarter of 2015; however, one requirement of this agreement is that ExxonMobil would return the refinery to normal operations. Full restart of the two units is expected to take nearly a month. This is especially good news for California motorists who pay some of the highest prices for gasoline in the U.S. Motorists in southern California have suffered from gas spikes and localized shortages during the past 14 months due to service stations running out of gas before their supplies could be replenished.
Our update on gasoline prices would be incomplete without a discussion of crude oil. CNBC reports that West Texas Intermediate (WTI) opened this morning on the New York Mercantile Exchange at $37.97.
Bernhard Hartman and Saji Sam, both partners with Oliver Wyman’s energy practice, remind us that since the start of 2016, oil prices have swung between $27 and $42 per barrel. [Ref 1] Is this good, bad or indifferent news for our wallets and debit accounts? If one considers that this range is about a quarter of the 2008 peak crude oil price of $145, this alone would put a smile on most faces, especially motorists.
The question that everyone is asking is when will crude oil prices rebound? Perhaps a better question is if crude oil prices will rebound any time soon?
As the U.S. approaches the beginning of its annual summer driving season, we will take a deeper look at the lower crude oil prices and attempt to better understand what this means for a commodity that has undergone a number of changes and perhaps even a “disruption” in the energy sector over the past decade.
Until then, happy motoring.
- What Low Oil Prices Really Mean, Bernhard Hartman and Saji Sam, in the Harvard Business Review (Economy Section), March 28, 2016, https://hbr.org/2016/03/what-low-oil-prices-really-mean?referral=00202&cm_mmc=email-_-newsletter-_-weekly_hotlist-_-hotlist_date&utm_source=newsletter_weekly_hotlist&utm_medium=email&utm_campaign=hotlist_date