U.S. gasoline prices have been rising with crude oil prices

U.S. regular retail gasoline prices averaged $2.85 per gallon (gal) on Monday, March 29, according to EIA’s Gasoline and Diesel Fuel Update. U.S. gasoline prices have generally increased since reaching a multiyear low of $1.77/gal in late April 2020, primarily because of higher crude oil prices and higher wholesale gasoline margins. Prior to this week’s small decline, U.S. gasoline prices increased for 17 consecutive weeks in EIA’s survey, marking the longest consecutive streak of price increases since 1994.

Gasoline prices in the United States are primarily driven by four components: crude oil prices, refining costs, retail distribution and marketing costs, and taxes. Because gasoline taxes and retail distribution costs generally remain stable, changes in gasoline prices are primarily the result of changes in crude oil prices and refining costs.

Crude oil prices have been steadily increasing since reaching multiyear lows in 2020. Brent crude oil prices averaged $43 per barrel (b) in November 2020 and have since increased to an average of $67/b in March, based on data through March 22. Because a barrel contains 42 gallons, the price of petroleum products changes by 2.4 cents per gallon when the price of crude oil changes by a dollar per barrel, all else remaining equal.

Refining margins have been steadily increasing since late 2020, as estimated by the difference between refiners’ acquisition cost of crude oil and wholesale gasoline prices. Estimated U.S. average wholesale gasoline margins increased from an average of 18 cents per gallon (cents/gal) in November 2020 to 33 cents/gal in February 2021.

Differences in regional petroleum markets and state and local taxes lead to varied gasoline prices across the United States. Each Monday, EIA surveys gasoline prices for 10 U.S. cities, 9 states, 4 subregions, and 5 regions (PADDs), in addition to providing a national average. Regular retail gasoline prices in 4 of the 10 cities in EIA’s survey are already more than $3/gal. Seattle’s gasoline price surpassed $3/gal in late February 2021. Chicago’s did the same in mid-March. Both of the California cities in EIA’s survey—Los Angeles and San Francisco—have had gasoline prices above $3/gal throughout 2021.

Principal contributors: Sean Hill, Owen Comstock