There’s a surprising development to the lower priced gasoline that has been seen for almost a year now – refiners still make good profit even as they deliver the most gasoline in a decade because drivers lift consumption to record new levels.
When the year started and the gasoline price was even lower, the Energy Information Administration in January predicted US drivers would use 8.71 million barrels of gasoline a day during the first three months of the year. They were wrong – the usage level was 100, 000 barrels higher as the motorists drove a record 720.1 billion miles during the period – equal to around 3,900 return trips to the sun. “The speed at which demand picked up surprised a lot of people, including even ourselves,” comments Robert Campbell, an analyst at Energy Aspects, a London-based consulting company. According to figures from Heathrow, Florida-based AAA, retail gasoline in the US average $2.803 a gallon on June 15, surging 16 percent over the past couple of months and hovering near the highest level since November 2014. Back in May the association forecast average gasoline prices would be of $2.55 to $2.75 this summer.
Gasoline is almost a dollar below the level seen last year as US refiners use the incoming flood of low-density oil drawn from shale formations with hydraulic fracturing to produce cheaper fuel – as lighter oil usually delivers more gasoline than heavy crude. So, more drivers are taking advantage of the price drop this summer, for vacation trips and office commuting, as the US job sector added 3.1 million new ones in 2014, the most since 1999.