Refining Disruptions Fuel Higher Gasoline Prices Amid Tight Supplies

Global refining disruptions have led to tighter gasoline supplies and higher prices at the pump. According to data from the U.S. Energy Information Administration, the gasoline crack spread in New York Harbor has averaged around $1 per gallon higher than in May.

The crack spread is a measure of the profitability of refining crude oil into petroleum products like gasoline and diesel. Elevated crack spreads are largely due to tight gasoline supplies globally, which have increased the cost of imported gasoline and boosted demand for exports from the United States.

Regional prices vary significantly, with the West Coast averaging $5.21 per gallon and the Rocky Mountains at $4.27 per gallon as of Labor Day weekend. The East Coast and West Coast rely heavily on imports to supplement local production, while total U.S. gasoline imports have been 32% below the five-year average since March.

Distillate fuel oil and jet fuel crack spreads are even higher due to disrupted refining activities, which tend to supply larger volumes of these fuels globally than gasoline. U.S. refiners have shifted production to maximize distillate and jet fuel output as a result.