It's getting just plain ugly out there, folks. Chicago and NYC are the next major U.S. cities poised to breach the ugly $4/gal barrier, and likely won't be the last, either.
Chicago's metro average stands at $3.992 while NYC sits at $3.999. Both are likely to tip the psychologically important $4/gal level at any moment in the next 48 hours. It would represent the earliest in the year that prices have hit $4/gal in both of these areas. The worst? We aren't expecting much improvement in the days and weeks ahead.
So what's driving prices higher? The reason is less obvious, but positive sentiment from economic outlooks likely is playing a role, as well as refinery maintenance season. On the flip side, gasoline inventories remain near their year ago levels and oil inventories continue to be extremely healthy, standing 10% higher than a year ago. From my standpoint, this rally in prices in perhaps unjustified, undeserved. Fundamentals look okay- so is it a small rise in demand that's catapulting prices higher? Demand is up versus last year, but marginally.
Whatever the reason, wholesale prices have continued to rally. Perhaps Punxsutawney Phil should resort to predicting when gasoline prices will begin their annual rise instead of predicting the weather- which he's really terrible at.
Chicago and NYC will join many Californian cities that are already being hit hard in the wallet with well over $4/gal prices. Perhaps the worst of the situation isn't that prices are high, but that it's only February. Will we see "the traditional" rally in prices in late-March and April? God help us all.