By Nicole Jao
NEW YORK, April 28 (Reuters) – The average U.S. gasoline price rose to its highest level in nearly four years after the U.S. and Israel attacked Iran at the end of February, according to data from the American Automobile Association.
Average prices at the pump rose 7 cents to $4.18 a gallon on Tuesday, representing the biggest single-day increase in more than a month, AAA data showed. Gasoline prices have climbed $1.19 a gallon, or more than 40%, since late February.
Motorists around the country have been feeling pain at the pump as energy costs soar amid conflict in the Middle East that has choked shipping traffic through the Strait of Hormuz, the critical waterway through which about a fifth of the world’s oil-and-gas supplies transit.
“There has been no progress there at all and crude oil prices are increasing because of it,” Rystad Energy analyst Susan Bell said.
Gasoline prices could rise further if prices for crude oil used to make the fuel continue to surge, analysts said, noting that recent spikes in energy costs have squeezed margins, particularly at the retail level.
Retailers have seen margins compressed, as the cost of producing fuel surged. Gross margin for retailers across the country has typically averaged around 40 cents a gallon for the last five-plus years, said Tom Kloza, chief energy advisor to Gulf Oil, adding that retailers have seen their margins compressed by about 30 cents as of last week.
“We had an abnormal situation where a lot of the recent increases in April never made it to the street,” said Kloza. “The retailers have essentially been taking one for the team.” Retail prices need to move higher or else a lot of individual gasoline dealers are going to lose money selling motor fuel.
Last week, Brent crude futures gained about 16% and U.S. West Texas Intermediate rose nearly 13% on growing supply worries as efforts to end the Iran war stalled. Oil prices had taken a breather earlier this month on hopes of the Strait of Hormuz reopening.
Tight supplies as multiple refineries experience issues and go into turnaround have also contributed to high pump prices, particularly in the U.S. Midwest, GasBuddy analyst Patrick De Haan said. Retailers in the Great Lakes region could raise prices again as soon as later today, De Haan said.
Phillips 66’s 356,000-barrel-per-day Wood River refinery in Illinois took its crude oil unit and some other parts of the refinery offline at the end of February for a 45-day maintenance period.
Marathon Petroleum’s 253,000-bpd Robinson refinery in Illinois also began planned maintenance in mid-March, with units expected to remain offline until mid-May.
Over the weekend, BP’s 440,000-barrel-per-day oil refinery in Whiting, Indiana, experienced a brief power outage that caused one of its processing units to be shut down.
So far in April, there have been about 150,000 barrels per day of unplanned outages in the country and around 670,000 barrels a day of planned outages, according to Rystad Energy data.
(Reporting by Nicole Jao in New York; Editing by Chizu Nomiyama and Mark Porter)
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