U.S. wholesale fuel prices rise above pre-COVID-19 levels

U.S. fuel markets faced shocks in 2020 as shutdowns during the Coronavirus (COVID-19) pandemic meant fewer driving miles and, as a result, less demand for transportation fuel. Wholesale fuel prices slowly increased as demand rose again, but in recent months have surged to multiyear highs. Wholesale prices for Los Angeles Reformulated Gasoline Blendstock for Oxygenate Blending (RBOB), a common indicator for wholesale gasoline prices from the U.S. Department of Energy, Energy Information Administration fell below a dollar per gallon in the early months of the pandemic. Previous RBOB prices in January and February of 2020 were in line with the 2016-19 average of $1.80 a gallon. Wholesale ethanol prices, based on USDA, Agricultural Marketing Service data from locations in Illinois, Iowa, Minnesota, Nebraska, South Dakota, and Wisconsin, were 10 percent below the 2016-19 average of $1.38 a gallon in early 2020. Prices for both fuels began to fall in March 2020 when stay-at-home orders were first issued and eventually reached lows of $0.47 a gallon for RBOB and $0.78 a gallon for ethanol in April 2020. Since then, both price series have trended upward. In November 2021, RBOB prices averaged $2.55 a gallon, while ethanol prices averaged $3.24 a gallon. Ethanol, which in the United States is primarily produced from corn, is blended with gasoline to increase octane levels and to meet Renewable Fuel Standard obligations. On average, about 10 percent of retail gasoline is comprised of ethanol. This article is drawn from USDA, Economic Research Service’s March 2021 Feed Outlook report and features updated data.

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