Pain At The Pump Is Dominating The Headlines As Gasoline Prices Push Record Highs

Pain at the pump is dominating the headlines as gasoline prices push record highs, while soaring transportation costs are less noticeably hammering large parts of the global economy, and contributing to the latest slide in equity markets. For those that remember the 2008 boom and bust cycle, there is an eerie similarity creating concerns of what might happen this fall as prices keep climbing relentlessly into the summer. 

Gasoline futures came within ½ cent of the record high they set Sunday night, completing the recovery round trip after dropping 27 cents Monday and Tuesday. The US average retail price is currently just a couple of cents away from $5/gallon, and with the late week rally, we are likely to see that mark broken in the next few days. 

While ULSD futures are still a long way off from their record high set during the April short squeeze that saw NYH prices trading more than $1.20/gallon above most of the country, several regional cash markets are seeing new record highs set this week, which is pushing the national retail average towards $6 which will only make inflation go from bad to worse. 

Speaking of which, with both food and fuel seeing huge price increases in recent months, biofuels are caught in the middle as multiple types of buyers compete for feedstocks. One area this is particularly noticeable is in the price of B100 biodiesel, which is approaching $8/gallon, and causing blenders to cut back on non-mandated levels, and add surcharges in places where they’re legally obligated to blend.

The EIA expects US Refinery runs to hold near maximum levels this summer due to the high margin environment caused by the global disruptions and large drop in refinery capacity. The concern among many in the industry is that another busy hurricane season could interfere with that prediction.

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