Published February 15, 2013
The Wall Street Journal, By David Bird
NEW YORK–Spring hasn’t yet sprung, but gasoline prices already are in high gear.
Moreover, those who think increased supplies mean lower prices will likely get run over.
Futures prices on the New York Mercantile Exchange have zoomed to their highest levels since late September on concerns that seasonal refinery maintenance will reduce production and drive up prices, as more drivers take to the roads when the weather warms.
Reformulated gasoline blendstock futures for March delivery jumped more than 8 cents a gallon Thursday to $3.1166 a gallon, while April fuel prices top March levels by 19 cents a gallon.
The switch from winter-grade to summer-grade fuel, now drawing near, causes prices to fluctuate. But this year, already low gasoline inventories in the heavily populated Northeast U.S. were further tightened by operational problems at terminals and refineries due to Hurricane Sandy.
Gasoline marketers have scrambled to replenish supplies, with high prices acting as a magnet to pulling more imports to the region.
Fuel inventories in the mid-Atlantic states, including the New York Harbor region, which is the delivery point for the gasoline futures contract, climbed last week to top year-ago levels for the first time since last Memorial Day. Regional stocks are at a nine-month high and supplies lag the five-year average level by just 3.9%, compared with a deficit of more than 20% at the end of November.
Higher prices for the benchmark contract ripple across the nation because the contract is used as a pricing standard for other grades of gasoline, even when the Nymex contract is affected by regional concerns because it is settled in New York Harbor.
Despite the appearance of strong supplies in the Northeast, motorists are paying a hefty price for those additional supplies. Already the nationwide price of regular gasoline, at $3.61 a gallon this week according to government data, is at a record high for this time of year.