EIA: Several Causes for Rising Gas Prices

According to the U.S. Energy Information Administration , there are several causes for the recent rise in gas prices, including refinery outages, higher crude oil prices and the difference between the wholesale price of gasoline and the price of crude oil. Here are the details.

* The average retail price for a gallon of regular gas has increased about 45 cents since the start of the year, the EIA reported.

* One of the culprits for the increased price, stated the EIA, is what is known as the gasoline crack spread -- the difference between the wholesale price of gasoline and the price of crude oil.

* Previously, the administration has described crack spreads as a "simple measure" based on just a couple of items produced in a refinery -- generally gasoline and distillate fuel. Crack spreads do not take into consideration all refinery product revenues, however, and exclude refining costs except the cost of crude oil.

* According to the EIA, during the period between Jan. 1 and Feb. 19, the price of Brent crude oil -- the grade that drives the wholesale gasoline price in most of the United States -- rose about $6 per barrel, or 15 cents per gallon.

* Crack spreads in late 2012 were very low until, and in some cases negative as a barrel of gasoline was worth less than a barrel of Brent crude oil. The increase in the price of crude oil in December, then, resulted in higher gasoline crack spreads and may account for about two-thirds of the rise in gasoline prices since the start of the year.

* Other factors contributing to the rise in retail prices for gasoline include multiple refinery outages that have reduced the U.S. capacity to manufacture gasoline.

* According to Bloomberg Business Week , planned refinery outages will continue to be of concern, as seasonal plant maintenance usually peaks in March and April. It was noted that refineries used 82.9 percent capacity in the week that ended Feb. 5, the lowest level in 11 months.

* In addition, the EIA reported, the year-over-year global product demand for petroleum is up and expected to rise even more. The rise in demand impacts domestic refinery utilization rates, maintenance needs and product balances.

* Preparation for the seasonal switch to summer grade gasoline have continued to also add to the short-term volatility of gas prices, the EIA reported.

Source: http://news.yahoo.com/eia-several-causes-rising-gas-prices-172200671.html

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