U.S. motorists kick off summer driving season with tame gasoline pricing
(Reuters) - Jason Turcotte of Southern California moved up a cross-country driving trip this year to April instead of summer, fearing that gasoline prices would repeat last year's sharp run-up as vacation season unfolded.
He returned home to California this week only to find fuel prices lower than when he left, with the U.S. retail average about $3.56 a gallon, down about $1.50 from last summer's peak.
"I had expected another price surge after Memorial Day weekend with schools getting out for break," Turcotte said, referring to the U.S. holiday that falls on May 29 this year.
U.S. motorists are enjoying a so-called Goldilocks market, or one that is considered "just right," for gasoline. Production is strong and prices are moderate. Product supplied, a proxy for demand, is up 2.5% year-on-year to 9.066 million barrels per day (bpd), according to the Energy Information Administration.
Helping moderate this year's prices: crude oil prices - the largest component of retail gasoline prices - are down 31% from peaks last year following Russia's invasion of Ukraine and resulting sanctions.
U.S. refiners continue to run their plants at a better than 90% utilization rate, helping assure a steady flow of fuel for summer demand. Oil futures prices also are cooler this year in part because of worries of a recession which could dampen demand.
"Refiners are happy with this kind of price at least for the time being," said Mizuho Securities' director of energy futures, Bob Yawger.
It may not be worry-free cruising later this year. U.S. gasoline stocks are very tight, with supplies down 1.6% from year-ago levels and major refining outages could undercut new supplies.
Prices also could rise later this year if China's coronavirus recovery adds 2 million bpd of demand later this year, as some analysts expect, or if OPEC+ moves to further cut oil production.
For now, U.S. drivers have a green light to hit the road. Motorist group AAA predicted the May 27-29 Memorial Day holiday weekend will be the third-busiest for auto travel since 2000.
Turcotte said only a return of gasoline prices to levels near the summer of 2022's $7 a gallon price in California would crimp his future driving plans.
"It would give me pause for planning bigger trips and especially cross-country travel," he said.