Retail gasoline prices rise in the western United States
As of August 2, 2021, regular retail gasoline prices in both the Rocky Mountain region (PADD 4) and the West Coast region (PADD 5) have been higher than the national gasoline price average, according to our Gasoline and Diesel Fuel Update. Among other factors, refinery closures in the West Coast and Rocky Mountain regions in the past year have reduced refinery output of gasoline, which in turn has lowered inventories and contributed to higher prices.
The average regular retail gasoline price in the Rocky Mountain region was $3.64 per gallon (gal) on August 2. That price is $1.27/gal higher than prices were a year ago and 48 cents/gal higher than the U.S. average price. Similarly, retail gasoline prices in the West Coast region were $3.91/gal, $1.08/gal higher than last year and 76 cents/gal higher than the U.S. average price.
The Rocky Mountain region and the West Coast region produce almost all of the gasoline they consume. The Rocky Mountain region had 16 refineries until mid-2020, when HollyFrontier announced it was closing its 48,000 barrels per day (b/d) refinery in Cheyenne, Wyoming. That closure reduced Rocky Mountain refinery capacity by 7%. In the West Coast region, the closure of the 161,000 b/d Marathon Martinez refinery in California in mid-2020 may also be affecting gasoline supplies, inventories, and prices. Also in the West Coast region, Phillips 66 announced plans to stop refining petroleum at its 120,200 b/d Rodeo refinery in California while the refinery transitions to renewable fuels production. The refinery had not terminated its petroleum refining operations as of January 1, 2021, and it is still actively refining crude oil. However, gasoline production in the West Coast region might be further constrained when the refinery’s transition to renewable fuels is complete. West Coast gasoline imports have increased to higher-than-average levels in recent weeks.
Both the Rocky Mountain and West Coast regions have been operating at reduced refinery utilization rates this summer compared with average summer rates—another factor limiting gasoline production and raising prices.
Low gasoline inventories are another factor contributing to higher prices, particularly in the Rocky Mountain region. As of July 30, motor gasoline inventories in the Rocky Mountain region totaled 6.1 million barrels, 15% less than the five-year (2016–20) average. On July 16, Rocky Mountain gasoline inventories totaled less than 5.8 million barrels, the lowest level for any week since June 7, 2013.
Demand for gasoline is also on the rise because people are driving more, based on indicators from Google Mobility, which shows that people have been spending less time at home and more time visiting other destinations. Increases in the number of visitors at national parks is another sign of increased driving, particularly in the Rocky Mountain region. According to the National Park Service, the number of visitors to Yellowstone National Park, Zion National Park, and Rocky Mountain National Park from January through June 2021 range from 8% to 26% higher than during the same period in 2019.
Principal contributor: Jeff Barron
Tags: prices, gasoline, liquid fuels, oil/petroleum