Memorial Day stands just two weeks away, and with U.S. and Canadian gasoline prices going up, some are asking how long this may last and where prices may move to. I'll try to provide some explanation of both.
The week ahead will likely see gasoline prices advance in slightly over two-thirds of communities. These areas will likely be the Plains states as well as the West Coast. The Great Lakes will continue to see prices hold in the upper-$3/gal range. Areas of the Southern U.S. may see little change- some areas will rise, some may drop.
So what's been going on to cause this sudden upward trend? Well, in some areas of the country- mainly the West Coast- suddenly appearing tightness in gasoline supply is likely a significant push higher. In the Great Lakes the same holds true, but things may ebb soon there. Oil prices had rallied from where they were in April, and now stand some $8/bbl higher than they did in the early spring. Gasoline futures have followed crude's run higher, likely in sympathy, and likely due to aforementioned reasons.
Is there an end in sight? Perhaps- as we near Memorial Day, oil prices may give up some ground. There seems to be "seasonal anxiety" when it comes to petroleum markets ahead of the start of the summer driving season. Call it hypersensitivity or whatever you like, but after we make it through Memorial Day- the first major test of logistics and supply ahead of summer, things will likely cool.
The month of June tends to feature among the lowest gasoline prices that we see during the summer, so fear not. History says some relief is on the way. In addition, most refiners are wrapping up maintenance and resuming production.
While we may see an increase in retail gasoline prices in the next week, prices may cool off as we approach the end of May and into early June.