At the moment, many refineries are producing less gasoline because of routine yearly maintenance. On top of that, refineries in regions with pollution problems are undergoing their annual switch to summer gasoline from winter gasoline, mandated by air quality regulations. The annual transition is usually good for a price bump because the summer formula, designed to reduce evaporation of pollutants during warm weather, is more difficult and more expensive to produce than the winter formula.
Then there's the matter of what type of oil the regional refineries are using. In recent months, West Texas Intermediate oil has been significantly cheaper than Brent crude. But because of pipeline transportation bottlenecks, little of that cheaper oil travels to the West Coast and East Coast. Refineries there are more likely to use imported oil. "If you live on either the East or West coasts, the oil used to refine your gasoline costs $120 a barrel or more," said Phil Weiss, senior energy analyst for Argus Research.
So there still should be excess supply in the U.S. to drive down gasoline prices, right?
Wrong. U.S. refiners have be closing refineries in response to declining demand. In addition, refineries have been shipping record amounts of refined fuels overseas, where demand is higher. That has helped keep supplies in the U.S. relatively tight.