Retail Gasoline Prices to Turn Higher After Labor Day

By Brian L. Milne, Refined Fuels Editor, DTN

Wholesale prices for gasoline moved higher across the country just ahead of Hurricane Gustav’s landfall along the southern Louisiana coastline, as fear of potential supply disruptions caused by the one-time powerful Category 4 storm triggered increased buying that pushed up values.

The increase in wholesale prices will translate into higher costs for most consumers at their local gasoline pumps this week.

View DTN’s Weekly and Historical Gas Prices

The projected increase in retail gasoline prices would snap an ongoing decline in the average price for regular grade gasoline in the U.S., which the Energy Information Administration (EIA) pegged last at $3.685 per gallon.

The nationwide average had fallen for seven consecutive weeks through Aug. 25, tumbling 42.9 cents or 10.4% since posting a record high average July 7 at $4.114 gal.

Preliminary estimates indicate that Gustav avoided a large chunk of the oil infrastructure in offshore waters in the Gulf of Mexico and onshore along the coasts that triggered a sell-off in wholesale markets right after Labor Day, but there remains much uncertainty regarding the level of damage that might have been caused. No less than ten oil refineries were shut ahead of Gustav’s arrival, with those facilities still shut or at reduced operations by late Tuesday morning (9/2). In fact, wholesale values moved off initial post Labor Day lows as more news surfaced.

The hurricane in the Atlantic Basin is at a peak now, meaning the potential for more storms in the coming weeks that could impact retail gasoline prices. Looking past that concern, retail prices will look to move lower as we exit summer and as refiners switch to winter grade gasoline production which costs less to make.

About the author:
Brian L. Milne is the Refined Fuels Editor for DTN—a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for nearly 14 years as an analyst, journalist and editor. He can be reached at brian.milne@dtn.com.

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