When I was a struggling student in high school Earth & Space Science, I learned that weather results from the uneven heating of the earth. Midwestern states in the U.S. represented the greatest clash of systems, and accordingly, that explained the propensity for violent weather each Spring.

   Unfortunately, the weather metaphor is an appropriate image for what is now happening in the heartland with respect to gasoline prices.  These markets are now subject to the type of violent  updrafts that lifted western states above $3.40 gal for gasoline in late April. Interestingly, the western markets have backed off by 20-30cts gal from early May highs, so there’s hope for states currently in the eye of the storm..

   The market - - that group of buyers, sellers, trade interests, investors, etc that accounts for daily wholesale price moves -- has been in uproar this week east of the Rockies, but particularly in states like Oklahoma, Kansas, Nebraska, the Dakotas, Missouri, et al. Just in the last six hours, spot gasoline prices are up 20cts gal in the Great Plains, and 13.5cts gal for markets sourced to the U.S. Gulf Coast. With the exception of the U.S. northeast - - where wholesale prices are relatively calm - - the east of the Mississippi region is about to hit new records in some cases not witnessed since Hurricane Katrina.

   This will ensure that we’ll see higher nationwide prices into the weekend, but again, I will reiterate that the $4.00 gal average is not in any reasonable person’s crosshairs. That doesn’t mean that it won’t dominate print and electronic headlines well into next week, however.

Today’s Energy Information Administration Report

   Ultimately, the fundamentals in the oil marketplace do matter, although much of what is happening now is attributable to the machinations of an angry crowd – the market.

   But are some quick notes related to the latest batch of data issued by the EIA - -people that do great work, regardless of the fact that those individuals with vested interests will make subjective interpretations and misstate the import of the numbers.

  Department of Energy statistics released today were “hopeful” but inconclusive. Members of the school of thought that suggests refiners will not be able to match past Spring/Summer utilization rates still can make their case. But so too can those in the school that opine that rates will trend high enough in the next 30 days to put $4.00 gal gasoline stories to rest.

   The breakout for West Coast data is particularly interesting. Stocks there increased and have now grown by more than 1-million bbl for each of the last two consecutive weeks. Refinery runs there have steadied after an incredibly troublesome April, and imports of nearly 100,000 b/d have pushed some more barrels into an area that was clearly starving for fuel.

   However, western gasoline output hasn’t really moved up from where it was two weeks ago, so there’s the suggestion that softer demand may be the dominant factor. That softness in demand - - confirmed by some multistate chain operators - - appears to be spreading eastward across the Rockies into the Great Plains and Great Lakes’ states.

   The most recent number for overall nationwide gasoline production represents the highest output since January 26 when retail prices were around $2.20 gal nationwide. Most traders are reluctant to call a top to this nine lives’ Spring rally, however, until gasoline production gets to the 9.3-million b/d or so level. That could happen before Memorial Day if there are no further refining incidents.

   Another hopeful sign for those looking for more temperate pricing came in the offshore market. Gasoline imports topped 1.5-million b/d, and those checking the historical charts found that there were two weeks of greater than 1.6-million b/d of foreign arrivals last year.

   But there are still clearly sore spots. The East Coast stood out in this regard. Refinery runs dropped 78,000 b/d in this region and that contributed to a 129,000 b/d drop in gasoline output. Gasoline stocks fell by 700,000 bbl on the East Coast and the drop was skewed toward lower reformulated inventories in the central Atlantic. With the NYMEX hub within that region, it hints at continued tight supply for the boutique RBOB grade that remains the nation’s principle benchmark.

   The Gulf Coast is a bit of a conundrum. The data suggests that the region is back on its feet, with gasoline output rising 204,000 b/d and inventories climbing by 1.4-million bbl. But the last week has seen the physical market FOB the Gulf surge to huge premiums versus NYMEX futures, with $40-$50 bbl margins witnessed for some Gulf Coast refineries.