Rising nearly a nickel to $2.66 per gallon, the U.S. average price for regular gasoline was up for the first time since January 11. The price was 75 cents above last year at this time. The West Coast (Alaska, Arizona, California, Hawaii, Nevada, Oregon, and Washington) average moved fractionally higher to $2.87 per gallon. The price in California dipped nearly a penny to $2.92 per gallon.
     After five weeks of decline, the U.S. average price for diesel fuel rose about eight cents to settle at $2.83 per gallon. The average is 70 cents above a year ago. Diesel prices rose in all regions of the country. The average on the West Coast increased seven cents to $2.92 per gallon, while the California price moved up eight cents to $2.98 per gallon.
     On Monday the Oil Pricing Information Service crude price reached the $80 per barrel mark amid some headlines perceived as bullish for oil markets. The U.S. dollar edged lower, and the U.S. Central Bank was expected to keep interest rates low. A French refinery workers strike and Iran's nuclear plans were also cited as events deemed influential in pumping up the price. The price for domestic crude sagged during the week and then picked up $1.49 on Friday to close at $79.66 per barrel.
     San Antonio-based AGE Refining filed for Chapter 11 protection on Feb. 8. The company ceased operations last week, following the failure to secure letters of credit to purchase crude supplies. One expert expressed surprise that more small, independent refineries have not yet filed for bankruptcy. It is estimated that approximately 5 percent of US petroleum refining capacity has shut down. Analysts estimate that the permanent shut down of about 10% of petroleum refining capacity in the U.S. needs would boost the ailing crude processing margins to define a true change in the refining industry.
     Since prices of crude purchased for refining and the sell price of finished products are both volatile, some companies cease operations only temporarily, waiting until the markets change and refining is profitable again. Crude oversupply and increased refining capacity around the world are two factors experts point to as putting long-term pressure on US refiners. According to a recent report by an energy consulting firm, size is the key factor influencing refinery survivability and next is location. Large-scale refiners have a better chance of making the economics work.The smaller capacity refineries have been feeling the economic pinch lately, especially those on the Gulf coast.
     One more thing - March is when refineries change to summer-grade gasoline. This typically causes gasoline prices to rise. You can count on it.

Chris Nobles
Commercial Fueling
Nella Oil Company