Gas prices increasing again due in part to Americans driving less. Demand for gas in US at 15 yr. low, squeezes refinery profits

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"Companies have chosen to shut down a handful of large refineries rather than continue to lose money on them."

1/6/13, "Low 2012 gas prices will evaporate this year," USA Today, G. Strauss

"Gasoline prices, which hit a 2012 low of $3.22 a gallon Dec. 19, are up 8 cents in the past two weeks and will likely continue climbing through April....

"The celebration is over,'' says Patrick DeHaan, senior energy analyst at gasbuddy.com, which operates 250 North American price-tracking websites. DeHaan expects prices to rise another 35 cents a gallon through early April before peaking at about $3.95 a gallon. That's on par with 2012's $3.94 peak and but below 2008's record $4.11....

Despite decreasing demand, last year's prices were impacted by both global oil prices and limited refinery capacity. Refinery shutdowns and reduced production in California, Washington and Illinois caused both regional and national wholesale prices to surge before seasonal demand slumped in the fall. Pump prices fell nearly 15% from Sept. 14 to Dec. 22, according the AAA, on falling demand and higher inventories.

DeHaan expects less volatility and smaller price hikes in the Midwest and West Coast, but refinery woes could again plague the market.

"Americans think there should be this magic formula based on oil supplies. But refineries are the big wildcard," he says. "And even with higher energy production, increased fuel efficiency and lower consumption, we still may face rising gas prices.''"

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"Demand for gasoline in the U.S. is at a 15-year low."  

2/23/12, "Angry About High Gas Prices? Blame Shuttered Oil Refineries," Bloomberg, M. Phillips

"Over the past year (2011-2012), refineries have faced a classic margin squeeze. Prices for Brent crude have gone up, but 

demand for gasoline in the U.S. is at a 15-year low.

That means refineries haven’t been able to pass on the higher prices to their customers.

As a result, companies have chosen to shut down a handful of large refineries rather than continue to lose money on them.

Since December, the U.S. has lost about 4 percent of its refining capacity, says Fadel Gheit, a senior oil and gas analyst for Oppenheimer. That month, two large refineries outside Philadelphia shut down: Sunoco’s plant in Marcus Hook, Pa., and a ConocoPhillips plant in nearby Trainer, Pa. Together they accounted for about 20 percent of all gasoline produced in the Northeast.

This week, Hovensa finished shutting down its refinery in St. Croix. The plant processed 350,000 barrels of crude a day, and yet lost about $1.3 billion over the past three years, or roughly $1 million a day. The St. Croix plant got hit with a double whammy of pricing pressure. Not only did it face higher prices for Brent crude, but it also lacked access to cheap natural gas, a crucial raw material for refineries. Without the advantage of low natural gas prices, which are down 50 percent since June 2011, it’s likely that more refineries would have had to shut down."... 




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