US gasoline prices rise as Venezuela oil sanctions tighten

Gasoline prices began to rise this week, the federal government reported Wednesday, as U.S. Gulf of Mexico refineries continued to be disproportionately affected by crude oil supplies from Venezuela lagging in response to U.S. sanctions.

The Energy Information Administration, the Energy Department’s analysis arm, reported in its latest analysis that the average price of gasoline rose 2 cents as U.S. sanctions went into their second week.

The Trump administration leveled sanctions against oil imports from Venezuela late last month in response to President Nicolas Maduro’s decision to disqualify election results that would have had him tossed from power. Venezuela is the only OPEC member in the Western Hemisphere.

The U.S. retail price of gasoline had fallen a penny last week as the EIA anticipated no significant impacts for U.S. refineries from the sanctions. But things have changed slightly moving into the second week.

Although the agency is optimistic that U.S. refiners will be able to find alternative sources of crude oil, it reports Wednesday that Venezuela sanctions, in combination with recent crude oil supply cuts from OPEC and Canada, have “disproportionately reduced the availability” of heavier grades of crude oil that U.S. refiners are designed to use optimally.

In addition, the price for medium and heavy crude oil is also rising on the international market.

EIA says gasoline prices should remain stable because global supplies are high. But that will begin to change in the early spring as demand for the fuel rises with increased driving and those supplies begin to fall.

Hannah Breul, EIA’s lead petroleum analyst, told the Washington Examiner that fuel prices always rise a little in the spring, as refiners switch to summer fuel blends.

Still, the main driver of fuel costs is crude oil prices, she added.

Oil prices went up on Tuesday by over a dollar on the heels of sanctions, even as EIA reported that oil inventories remained high.

Breul explained that global oil markets should still be able to move in consumers’ favor, saying excess supply should provide a cushion to avoid price spikes.

EIA’s new analysis showed that U.S. gasoline inventories reached all-time highs in January and February, which should also keep prices lower.

Nevertheless, EIA’s latest Short-Term Energy Outlook released Tuesday forecasts that gasoline inventories will lose 19 million barrels from the end of January through the end of April.

Related Content