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Drivers will pay less for gas this July 4th than last year, despite a recent rise in prices

Key Points
  • As drivers take to the roads in record numbers this Fourth of July holiday, gas prices should be less in most places than they were this time last year, even with the shutdown of a major refinery and new gasoline taxes in 13 states.
  • Gas prices are up an average 7 cents a gallon nationally since the Philadelphia Energy Solutions refinery was shutdown June 21 after an explosion and fire.
  • The cost of a gallon of gas should be about 10 cents lower nationally, than it was this over the July Fourth holiday last year.
A customer prepares to pump gasoline at a Chevron gas station in San Rafael, Calif.
Getty Images

Drivers should pay about a dime less per gallon for gasoline over the Fourth of July holiday than last year, even with a major refinery outage and new taxes in about a dozen states.

A record 41.4 million people are expected to travel on the nation's roadways over the long holiday weekend, an increase of 4% from 2018, according to AAA, and even with the shutdown of the largest East Coast refinery, gasoline should be plentiful.

Since the June 21 blast halted operations at Philadelphia Energy Solutions' 335,000 barrel refinery, the national average for gasoline has risen by about 7 cents per gallon of unleaded to about $2.73 per gallon. The national average on the holiday weekend last year was $2.85 per gallon.

Gasoline prices could continue to rise into the weekend, as the East Coast market adjusts to the loss of the Philadelphia refinery, which was 27% of the region's refining capacity. The refinery is scheduled for permanent shutdown, and the shortfall is expected to be made up by shipments from Europe and Canada, and also more gasoline coming via pipeline from the Gulf Coast.

"You might get a nickel or dime higher in some places. People aren't going to see sticker shock," said Tom Kloza, head of global energy analysis at the Oil Price Information Service. "Globally, there's a little too much gasoline."

In Pennsylvania, the biggest market for PES gasoline, prices have risen by about 9 cents to an average $2.91 per gallon since the explosion and fire at the Philadelphia refinery. Gasoline in the New Jersey suburbs of Philadelphia was up 12 cents from last week, at $2.75 per gallon. But the average price in nearby New York state has risen just 2 cents per gallon to $2.87, according to AAA.

"With the Fourth of July falling on a Thursday, it's probably the nine days of highest demand we'll see all year" through July 8, Kloza said. But even with anticipated price increases, the national average price likely peaked in May at $2.89 per gallon, he said.

Besides the outage, the increase in sales taxes in 13 states as of July 1 also impacted the national average price of gas at the pump.

According to OPIS, California raised its tax by 5.6 cents for a total 47.3 cents per gallon, while Ohio boosted its gas tax by 10.5 cents to 38 cents per gallon. Illinois doubled its tax to 38 cents per gallon. Drivers in that state were paying an average $2.99 per gallon on Tuesday, up 11 cents in one day and up 16 cents in the past week, according to AAA.

Until the new taxes went into effect, only California and Nevada had higher prices than last year's level, according to OPIS. In California, the average price of gasoline was $3.76 per gallon of unleaded on Tuesday, up from $3.66 per gallon a year ago.

Another factor in the recent rise in gasoline prices was the jump in crude oil prices in the past several weeks, in part the result of tensions in the Middle East. Over the last month, West Texas Intermediate oil has risen about 7.5%.

"Whether or not we have hit a peak price depends on tensions between the U.S. and Iran because events in the Middle Ease can cause oil prices to take a significant jump higher," said Andrew Lipow, president of Lipow Oil Associates. "The Fourth of July weekend is here, gasoline prices I expect to be more or less stable over the next week. There is supply that is on its way, and the industry has managed to cope with the Philadelphia Energy Solution shutdown."

According to OPIS, other states that raised taxes this week include Connecticut, up 2.6 cents on gasoline; Tennessee, up 1 cent on gasoline and 3 cents on diesel; and South Carolina, which raised taxes on gasoline and diesel by 2 cents a gallon as part of a larger phased-in increase.

Indiana raised its gas tax by half penny and diesel tax by 1 cent. Maryland raised both gasoline and diesel by 1.4 cents per gallon. Michigan, Montana, Nebraska, Vermont and Rhode Island also raised taxes slightly.