West Texas intermediate, a benchmark crude, hit a level today that hasn't been seen since the early days of Major League Baseball's 2012 season. Crude oil for March delivery hit $97.75/bbl in intraday trading today, the highest price since closing at $97.94/bbl on May 7, 2012.
Many motorists always beg the question why gasoline prices aren't the same price as the last time oil was at a certain price, but they are clearly coming out ahead this time around. The last time WTI crude was this high, the national average stood at $3.765/gal, compared to today's level of $3.35/gal.
The states to be impacted the most include California, Michigan, Illinois, Indiana, Ohio, Kentucky, Wisconsin, and Missouri. To a lesser extent, Oregon and Washington likely will also see some increases. In fact, some of the Great Lakes states have already seen big jumps over the last week or two as regional refineries begin maintenance.
Even the cheapest gasoline stations in Laramie, Wyoming have hiked. The cheapest station there was $2.34/gal last week, and has now hiked over 10c/gal to $2.45/gal, and will likely continue to see hikes. The Rockies will likely see smaller hikes, but in the weeks ahead will play catch up to any changes in the national average.
The reason for the sudden increases can be attibuted to different factors. In California, seasonal switches to cleaner burning summer gasoline are taking place (yes, already!), meanwhile in the Great Lakes, refinery outages and supply situations are driving prices up. In the Rockies, prices had been low, but as Canadian oil rises in value, prices will also move higher.
The story doesn't just end with the United States. Canada is seeing a sharp increase at the pumps as well, with the average there rising over 2c/L just in the last week. While the U.S. and Canada are both seeing national averages below their year ago level, it may not be long before they're on par with where they were 365 days ago. Just two cities in Canada have averages under 100c/L- Calgary and Edmonton, not far from the massive oil fields that quench part of North America's insatiable thirst for oil.
Just six major cities in the U.S. are left with averages under $3/gal, and six may drop to just a few in the next week. Likewise, just three states still see averages under $3/gal, all of which are in the Rockies. In a week, it might just be Wyoming that is left on that list.
Americans should be prepared for a week or two of perhaps faster changing prices then what we saw between Thanksgiving in Christmas, but things may fizzle by early to mid February. But its not all rosy- another round of increases will likely hit in late March or early April, bringing us close to yearly peaks.