On March 1st the front month futures gasoline contract closed at $1.74 a gallon. At the time of this writing the contract trades were at $2.03 per gallon, a 14% increase in five weeks. Further pushing physical prices higher is the price differential (Basis) versus the futures which moved $0.07.
Since retail prices lag, the cost at your local gasoline stations cannot pass along price increases quickly enough. In some Pennsylvania markets, distributors report zero to negative retail margins today.
Further pushing prices higher is the summer grade Reid Vapor Pressure (RVP). These are gasoline specifications mandated by the EPA and now entering the distribution system. Some suppliers still have winter grade but are purging that product now as the new product starts to arrive.
Retail gasoline prices are poised to move higher. Retail prices for 87 grade gasoline should be over $3.00 per gallon now, but retailers are reluctant to increase prices. Looking at a sampling of Pennsylvania prices as reported by Gas Buddy.
In Pittsburgh, PA the average regular price is $2.95 a gallon. In Altoona, PA the average price for regular is $2.90 per gallon. In Harrisburg, PA the average regular price is $2.87 a gallon.
These prices range from $0.10 to $0.15 per gallon lower than they should be, drivers will see an increase to $3.00 gasoline in Pennsylvania in the coming days.
These prices range from $0.10 to $0.15 per gallon, drivers will see $3.00 gasoline in Pennsylvania in the coming days.