West Coast refinery issues push up US average petrol price
Supply problems and special fuel blends in California and neighbouring states have kept US average petrol prices higher, despite falling global crude oil costs.
US average petrol prices have stayed stubbornly high in August 2015, with refinery problems and supply constraints on the West Coast offsetting the benefits of sharply lower crude oil prices. The national average for regular unleaded stood at $2.76 per gallon, according to AAA figures, only five cents below the June peak and the lowest for this period since 2010.
California and West Coast drive national average higher
California remains the most expensive state for petrol, with average prices reaching $3.87 per gallon, levels not seen since August 2014. The state’s position is driven by a combination of refinery outages, a lack of imports and the requirement for a special summer blend of petrol that is not easily sourced from other regions. Alaska, Hawaii, Nevada and Washington round out the top five most expensive states for retail petrol, all affected by similar supply and regulatory challenges.
While the national average has edged down by one cent from the previous week and four cents over the past month, regional volatility is pronounced. In California, petrol prices jumped 16 cents in a single week, reflecting acute supply constraints. Other West Coast states have faced smaller but still notable increases. These regional spikes have kept the US average higher than it would be if crude oil prices alone were the determining factor.
Special blends and refinery outages limit supply
Petrol sold in California and much of the West Coast must meet stricter air quality standards, requiring a special blend during the summer months. When local refineries experience outages or maintenance, replacement supplies are not easily obtained from outside the region. This has left the market exposed to sharp price increases when supply tightens. Imports to the West Coast have also been limited, further restricting availability and pushing up prices for consumers.
Cheaper petrol elsewhere in the US
In contrast, the cheapest petrol in early August 2015 was found in the southern states. South Carolina drivers paid an average of $2.37 per gallon, while Alabama motorists saw $2.41 per gallon at the pump. These states have benefited from easier access to supply and fewer regulatory barriers.
Despite the overall stability, the US average conceals the fact that drivers on the West Coast are paying over $1.50 per gallon more than those in the cheapest states. Unless refinery output improves or imports increase, the regional gap is likely to persist.
For context on recent trends in US fuel prices, see US fuel prices hit lowest quarterly average since 2004.
