You know things are bad when fuel prices are accelerating so fast @GasBuddyGuy Patrick De Hann had to change his bet on $5.00 national gasoline prices by a full week.
I’m no expert, but the price of gasoline and diesel are not going down anytime soon with crude oil prices at the level they are now. With West Texas Intermediate (WTI) and Brent Sea crude both at or near $120 a barrel (and summer vacation season on full tilt), there’s no logical reason for it to go down. Unless there is a massive amount of fuel that spontaneously appears out of thin air, we are stuck here for a while.
Fun Fact: Oil barrels contain 42 U.S. gallons by volume. The reason is back in 1859 when the first commercial oil well was founded in the United States, a small group of businesses met in northwest Pennsylvania to discuss how to market it. A wooden “tierce,” the common shipping cask or barrel, held 42 gallons of oil and weighed 300 pounds when filled. When it is refined, a barrel produces about 19.5 gallons of gasoline and 11.5 gallons of ultra-low sulfur diesel, or ULSD.
So how’s racing for top dollar fuel this week?
The leaderboard for top spot on the fuel prices has changed quite a bit this week. PADD2, which supplies the Midwestern states, is at the lowest inventories ever recorded. That caused some jockeying for Illinois to take third place, behind Nevada and California. Hawaii got knocked down to fourth place after the Illini fought for the position.
Looks like U.S. gasoline demand is dropping
The good news is that demand for gas station refills dropped over the Memorial Day holiday. The National gasoline demand from all PADDs dropped by 2.3% last week. PADD3 (the Gulf Coast states) saw a 4.6% drop in demand. PADD5 (the West Coast, Alaska and Hawaii) experienced a 3% reduction, with the other PADDs experiencing reductions of at or near 2%. This gave time for PADD 1a, the New England 6 surrounding Boston, time to actually refill their inventories by a small amount.
So where is the crude going?
Okay, this might not make sense, but according to Statista.com, oil rigs are coming online every week. In the last two years, rotary oil rig count has gone up from 251 rigs in July 2020 to 727 in May of this year. For an administration pushing green energy as hard as they legally can, that count does not look like fossil fuels are going away. It is a 45-degree angle increase in counts every month since mid-2020. So where is all this crude going?
Well, according to official government data from the Energy Information Administration, U.S. oil is being sent offshore as fast as possible. And don’t let the current talking points fool you. It’s been going on since 2016, when export rates went almost vertical. The U.S. doubled its crude export amount every year until 2019, when it reached a 3.2 million barrels a day. When refined, that’s nearly 1.48 million barrels of gasoline per day we would have to buy back.
So yeah, as I have been saying, until we get domestic supply levels back up, fuel prices across the country are going to stay high. With shortage panics and fear mongering allowing artificial pricing pressure to keep the prices on the increase, we might be seeing “double digit” gasoline prices in the outlying areas sooner rather than later.