"In the midst of winter, I found there was, within me, an invincible summer." -Albert Camus
Much like Albert Camus, in the midst of our Utah winter we are finding our invincible summer. Today’s rain along the Wasatch Front was a welcome change from the warm, dry weeks and months we been having, and I think most of us wouldn’t mind some more! (Maybe even some… snow?)
This week’s dueling forces driving gasoline prices were the same forces we’ve been keeping our eye on: oil/gas inventories rising (pushes gas downward), uncertainty in geopolitical maters (pushing prices up), and refineries slowly changing over to their gasoline formula like they do every spring to prepare for warmer months ahead (pushing prices up).
The combination of these forces increased the average price of a gallon of gasoline in Utah to $2.78. This was only a one cent increase from the previous week and a $0.21 cent increase over the past month. Based on our models, we’re forecasting prices to continue to climb to $2.83 over the next week, and $2.96 over the next month.
Driving Factors this week:
Geopolitical tensions (U.S.–Iran headlines) shifting crude risk premium
Large U.S. crude inventory build (EIA) pressuring oil prices
Seasonal refinery shift to summer blend lifting Utah pump prices
Locally, Utah gas is around $2.79, and the real story is the 20-cent jump over the past month. Refineries are switching from cheaper winter fuel to summer blend, which naturally costs more to produce. Because Utah’s refining system runs fairly tight, even small seasonal shifts can move prices quickly. So what you’re seeing right now is mostly normal spring pressure working its way through the system.
Globally, tensions between the US and Iran have oil traders pricing in risk before anything actually happens. When headlines hint at tension in places like the Middle East, crude prices can rise simply on the possibility that supply could be disrupted. That higher crude cost eventually flows through to gas stations. It’s less about an active conflict and more about markets charging a “just in case” premium for uncertainty.
The Crude Crystal Ball: Forecasting Prices
Seasonal Refinery Transition (Winter-to-Summer Blend Shift)
Upward Retail Price Momentum (Month-over-Month Acceleration)
Geopolitical Risk Premium in Crude Markets
Our forecast basically comes down to two things: momentum and seasonality. Utah prices have already jumped about 20 cents this past month, and we’re right in the thick of the refinery shift to more expensive summer fuel, which usually keeps prices pointing up for a while.
At the same time, crude oil is bouncing around on global headlines, and even small ripples there eventually show up at your local station. While we aren't seeing any major supply drama nearby, this seasonal tightening means you should expect a few more cents next week and a steady climb through the rest of the month.
Pump Up the Paranoia: Why the market’s jitters turn into your "Just-in-Case" tax.
If you’re wondering why your fill-up costs more this morning despite plenty of oil in the world, you're likely paying a "risk premium."
Even if the taps are still wide open, traders would rather pay a bit more today than get caught empty-handed tomorrow. It’s exactly like airline tickets spiking the moment a blizzard is forecasted; the snow hasn’t even hit the ground, but the price of uncertainty is already live. Since crude is the main ingredient for gasoline, that "nervousness" eventually trickles down to your local gas station.
Thanks for reading!
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-Mark Acor, [email protected]