PADD 4 experienced lagged spillover price effects from PADD 2. Maintenance at both of Minnesota's two refineries, in addition to other, larger refineries in PADD 2, pushed prices higher in PADD 4. The average Rocky Mountain retail regular gasoline price rose 24 cents from the end of April through the week of May 27, before turning lower as market tightness abated.
GULF COAST (PADD 3)
Average U.S. Gulf Coast gasoline spot prices were lower during the first half of 2013 than the same period a year ago, reflecting a similar reduction in Light Louisiana Sweet (LLS) prices over the same period. Without the disruptions affecting other regions, PADD 3 prices remained relatively stable – despite significant growth in regional gasoline demand.
Unlike the United States as a whole, gasoline demand in the Gulf Coast has experienced robust growth, rising 7 percent in 2012 over 2011. Available data (through April) shows a continuation of the trend, with 2013 consumption up almost 9 percent (118,000 bbl/d) over the same period a year ago. This is substantially above the 2-percent growth in PADDs 2 and 5, the other regions with demand growth, and the shrinking demand in the United States as a whole, which has declined every year since 2009.
WEST COAST (PADD 5)
Wholesale gasoline prices on the West Coast, represented by the Los Angeles (LA) conventional spot price, averaged $3.01 per gallon through June 26, down $0.12 (4 percent) from the same period in 2012.
Refinery maintenance caused several sharp wholesale gasoline price changes in PADD 5 in the first half of 2013. However, there were significant differences in the pass-through to retail prices during this period. Refinery maintenance in January was particularly heavy, with almost 300,000 bbl/d of fluid catalytic cracking (FCC) capacity offline. FCC units are particularly important for gasoline production, and FCC maintenance can significantly affect gasoline prices. Wholesale spot prices for LA conventional rose 70 cents per gallon from mid-January to mid-February and remained elevated until March. The size and length of the wholesale change caused a corresponding increase in prices at the pump.
Supply concerns surrounding mid-June refinery maintenance caused LA conventional gasoline prices to spike 40 cents in two days. However, initial market concerns were overblown, with adequate supplies in place to meet West Coast demand, and LA conventional spot prices quickly retreated. Despite the significant jump in wholesale prices, retail markets were relatively unaffected.