Gasoline prices across the United States are experiencing a nationwide increase, with significant regional variations influencing what drivers pay at the pump. These differences are shaped by local supply and demand dynamics, state-specific fuel formulations, and varying state tax rates. The current rise in gasoline costs is attributed by the U.S. Energy Information Administration (EIA) to escalating crude oil prices, a situation exacerbated by the de facto closure of the Strait of Hormuz, which typically accounts for about half of the retail gasoline price.
Despite the recent increases, current retail gasoline prices remain below the levels seen in May 2022. This period in 2022 was marked by substantial crude oil price hikes following Russia's full-scale invasion of Ukraine. This year, similar geopolitical events, including the disruption in the Strait of Hormuz, have again driven up crude oil prices and, consequently, gasoline prices, according to the EIA.
In the Midwest, recent temporary refinery outages and scheduled maintenance have contributed to price surges. For instance, Phillips 66's Wood River refinery in Illinois, with a capacity of 356,000 barrels per day (b/d), and Marathon Petroleum's Robinson refinery, at 253,000 b/d, have both undergone maintenance. Additionally, BP's 440,000 b/d Whiting refinery in Indiana experienced a brief operational disruption due to a power loss. In Colorado, Suncor's 117,000 b/d Commerce City refinery, which began maintenance in March, suffered an unplanned shutdown in May following a power outage.
These disruptions have led to higher prices in affected regions. Midwest retail gasoline prices averaged $4.40 per gallon (gal) on May 18, representing a 45% increase, or $1.37 per gallon, from the previous year. Similarly, Rocky Mountain retail gasoline prices averaged $4.59/gal, a 47% increase, or $1.46/gal, compared to last year, as reported by the EIA.
The West Coast consistently sees the highest gasoline prices due to several factors. These include the region's limited connectivity to other major refining centers, tight local supply and demand conditions, and higher-than-average state taxes in several states. Furthermore, California's specific gasoline formulations, which are more costly to produce, add to the price. On May 18, West Coast prices averaged $5.61/gal, a 31% increase, or $1.32/gal, from the previous year. Imports of gasoline to the West Coast have been increasing as local refinery capacity has decreased, according to EIA data.
Conversely, the Gulf Coast typically experiences the lowest gasoline prices. This is largely due to the region hosting over half of the U.S. refining capacity and having lower gasoline taxes than the national average. On May 18, Gulf Coast retail gasoline prices averaged $3.95/gal, a 42% increase, or $1.17/gal, compared to the previous year.
The East Coast, which accounts for the largest share of gasoline demand among the five regions, saw retail gasoline prices averaging $4.31/gal on May 18. This represents a 44% increase, or $1.32/gal, from the prior year.
Nationwide, the average retail price for regular-grade gasoline on May 18, the Monday before the Memorial Day weekend, stood at $4.49 per gallon. This price is 42% higher, or $1.32/gal more, than the multi-year low recorded a year ago. This average marks the highest price for the Monday before Memorial Day weekend since 2022, a period marked by significant crude oil price increases following Russia's invasion of Ukraine.
In response to the supply disruptions stemming from the situation in the Strait of Hormuz, the United States has taken several measures. These include releasing crude oil from the Strategic Petroleum Reserve as part of an international effort with the International Energy Agency. Additionally, the U.S. is temporarily permitting nationwide sales of E15 gasoline and has issued waivers under the Jones Act to facilitate oil trade between domestic ports. Federal enforcement of summer-grade gasoline standards has also been relaxed in an effort to stabilize gasoline prices.
Memorial Day weekend is a significant period for travel, with a substantial number of Americans opting to travel by car. The American Automobile Association (AAA) projects that 39.1 million people will drive over the holiday weekend, a figure comparable to the previous year. This increased travel demand, coupled with supply-side pressures, contributes to the current price environment at the pump.
