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US gasoline costs drop amid cheaper crude oil

08.25.2014  |  HP News Services

The cheapest crude since January has refiners producing fuel at record rates, helping lower the cost of gasoline at pumps across the country, according to a new survey.

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By JESSICA SUMMERS and DAN MURTAUGH
Bloomberg

The cheapest crude oil since January has refiners producing fuel at record rates, helping lower the cost of gasoline at pumps across the country.

The average price for regular gasoline at US pumps dropped 4.21 cents in the two weeks ended Aug. 22 to $3.4785/gal, according to Lundberg Survey. The average is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company. Prices are 8.01 cents lower than a year ago, the survey showed.

Retail prices dropped as West Texas Intermediate crude futures fell below $94/bbl. US refiners are processing the most petroleum for this time of year in records dating back to 1989.

“It’s crude oil at work,” Trilby Lundberg, the president of Lundberg Survey, said in a telephone interview. “The down factors outweighed the up factors. One of the many factors include robust US oil production.”

The highest price for gasoline in the lower 48 states among the markets surveyed was in San Francisco, at $3.92/gal, Lundberg said. The lowest price was in Jackson, Mississippi, where customers paid an average $3.11/gal. Regular gasoline averaged $3.66/gal on Long Island, New York, and $3.79 in Los Angeles.

Cheap Crude

West Texas Intermediate crude, the US benchmark priced in Cushing, Oklahoma, fell $4, or 4.1%, to $93.65/bbl on the New York Mercantile Exchange in the two weeks to Aug. 22. It’s the lowest settlement since Jan. 14.

Refineries processed 16.42 million bpd in the week ended Aug. 15, the highest level for mid-August in Energy Information Administration records dating back to 1989. Refinery inputs reached a record 16.63 million bpd on the week of July 11.

On the Gulf Coast, home to more than half of the nation’s refining capacity, rates rose to 8.74 million bpd the week of Aug. 15, the highest level on record.

Crude inventories nationwide fell 4.47 million bbl to 362.5 million, the lowest level since Feb. 21.

Gasoline Futures

Plants are taking advantage of the US shale boom, which has raised oil production 64% in the past five years. The increased output has pushed the settlement price of US benchmark WTI futures below European Brent every day since Aug. 17, 2010.

Gasoline futures on the Nymex slipped 1.53 cents, or 0.6%, to $2.7384/gal in the two weeks ended Aug. 22.

Gasoline stockpiles grew 585,000 bbl to 213.3 million, EIA data show. Demand over the four weeks ended August 1 was 9.016 million bpd, 2% below a year earlier.



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