fuel pumNew York — Tight gasoline supplies on the U.S. East and West Coasts have left both regions vulnerable to potential price spikes at the pump ahead of the peak summer driving season.
Supplies on both coasts are at seasonal five-year lows just days ahead of the May 27 Memorial Day holiday weekend starts, the unofficial beginning of summer.
The West Coast’s supplies tightened earlier this year due to a combination of refining maintenance, unexpected outages and a falloff in ethanol supplies needed to blend into the gasoline pool due to flooding in the Midwest.
Market participants have been sending supplies there instead of elsewhere as prices rose. California currently is posting the highest prices in the country, at an average of $4.054 per gallon, according to AAA. The state’s prices have been at their highest seasonally since 2014.
West Coast gasoline imports in April were up 62% from the same time last year, according to Matt Smith, director of commodity research at ClipperData.
That sapped cargoes from the East Coast, which has had its own refinery maintenance, traders said. Atlantic Coast imports in April were down 7% from last year, Smith said. Imports there have improved in May and so far are up 14% year-on-year.
On the demand side, the Memorial Day weekend is expected to post the second-highest travel volume on record since the American Automobile Association (AAA) began tracking the volumes in 2000, it said.
“Both regions will struggle to rebuild stocks in time to meet peak demand,” Energy Aspects said in a note. “At this point, the market will need to run to stand still, leaving it vulnerable to any additional refinery outages.”
East Coast inventories fell to 59.9 million barrels last week, while West Coast stocks dropped to 26.4 million barrels, Energy Information Administration data showed. Both were at their lowest seasonally since 2014.
“Supply definitely plays into this. If it continues to shrink going into summer and at the height of summer, that would impact gas prices to go up,” AAA spokeswoman Jeanette Casselano said.
Gasoline prices across the Pacific states are averaging more than $3 per regular gallon, according to AAA figures. Prices in New York, New Jersey and Connecticut remain lower than last year’s levels, however.