At $2.34, the national gas price is cheaper today than it was on this day one year ago. The same trend rings true at the pump in 27 states in the southeast and Midwest – many seeing double-digit price drops. More so, in 46 states consumers are paying, on average, three cents less at the pump than a week ago.
The national price drop is due to an unexpected buildup of crude oil last week combined with ongoing high gasoline production runs, an increase in gasoline stocks and a drop in gasoline demand. . If refiners continue to produce record amounts of gasoline and oversupply the market, consumers will reap the benefit and see slight fluctuations in gasoline prices (+/- a few cents) in coming weeks. However, it is not likely that gas prices will drop much lower than this week’s prices.
- The nation’s top ten markets with the largest yearly declines Ohio (-46 cents), Indiana (-41 cents), Michigan (-35 cents), Illinois (-33 cents), Kentucky (-21 cents), Wisconsin (-19 cents), Oklahoma (-11 cents), Alabama (-10 cents), Tennessee (-10 cents) and West Virginia (-9 cents).
- The nation’s top ten markets with the cheapest gas this week include South Carolina ($2.01), Oklahoma ($2.05), Alabama ($2.06), Mississippi ($2.07), Tennessee ($2.08), Arkansas ($2.09) Virginia ($2.12), Missouri ($2.13), Louisiana ($2.14) and Kansas ($2.15).
Lately the most expensive gas markets in the country, prices in this region dropped as much as four cents, with six states paying less for a gallon of gas on the week: California (-4 cents), Nevada (-2 cents) Oregon (-2 cents), Washington (-2 cent), Hawaii (-1 cent) and Alaska (-1 cent). Gas prices in Arizona remained flat. The regional drop is likely due to easing supply concerns with the operational return of Valero’s Benicia, CA, refinery and the arrival of a U.K. gasoline cargo load in Los Angeles last Friday. However, with West Coast gasoline inventories registering at new low of 28 million barrels (bbl), this week’s supply and demand levels could be an indicator for what consumers will pay for a gallon of gasoline in the region this summer.
Next month, California drivers may see a minor increase at the pump as the state raises its excise tax rate for gasoline by 1.9 cents/gal to 29.7 cents/gal. The price hike is scheduled for November 1, but retailers can pass on this extra cost to consumers as early as July 1, when the excise tax takes effect, according to the California State Board of Equalization (CSBE).
Gas prices are slightly volatile in the region with prices dropping as much as two cents in Colorado and increasing by one cent in Idaho. Montana, Wyoming and Utah remained stable on the week. However, comparing today’s gas prices to one year ago, consumers in the Rockies are paying a lot more at the pump: Idaho (+13 cents), Utah (+12 cents), Montana (+7 cents), Wyoming (+7 cents) and Colorado (+6 cents). As reported last week, fluctuation is likely due to demand increasing in the region ahead of the summer travel season, according to the Energy Information Administration (EIA).
Great Lakes and Central States
Following four straight weeks of draws, gasoline inventory is on the rise in the Great Lakes and Central States. According to the EIA, inventory in the region had its biggest one-week increase since the end of January. Sitting at nearly 55 million bbl, inventory is almost 2 million bbl higher than this time last year.
The high inventory is leading to dropping gas prices both on the week and compared to one year ago today. This week, all states are seeing on average a four-cent decrease. Compared to one year ago, six states are seeing significantly cheaper gas: Ohio (-46 cents), Indiana (-41 cents), Michigan (-35 cents), Illinois (-33 cents), Kentucky (-21 cents) and Wisconsin (-19 cents). As inventory grows and demand remains inconsistent, the cheaper gas prices are likely to hold throughout summer in the region.
South and Southeast
The country’s cheapest gas prices continue to be in the south and southeast: South Carolina ($2.01), Oklahoma ($2.05), Alabama ($2.06), Mississippi ($2.07), Tennessee ($2.08), Arkansas ($2.09) and Louisiana ($2.14). In the region, all states saw prices decline at the pump with Florida and Texas dropping the most by four cents. According to the EIA, gasoline inventory increased to nearly 81 million bbl.
Mid-Atlantic and Northeast – NJ up 22
Prices at the pump dropped in every state in the Mid-Atlantic and Northeast except Washington, D.C. where prices were flat. The states seeing the biggest weekly declines include Delaware (-6 cents), Maryland (-5 cents) and Pennsylvania (-4 cents). The EIA reports an 800,000-gasoline inventory build last week, bringing the total to nearly 70 million bbl. The build puts the region’s gasoline inventory above year-ago levels. And overall, compared to a year ago, gas prices are mostly reminiscent of last summer except in New Jersey, where prices are 22 cents more, and in West Virginia and Virginia where prices have fallen nine and eight cents respectively. With comparable gas prices to last summer, consumers may feel encouraged to drive more ultimately leading to an increase in demand, which could help dip into the supply levels.
Oil Market Dynamics
The oil market appears to be off to a good start this week, with the price per barrel above $46. The increase comes after last week’s report from the EIA showed surprising numbers in gasoline demand and crude inventories. After setting a record for use during the run-up to Memorial Day weekend, demand tumbled down by approximately 505,000 barrels per day. Market watchers expected to see a post-Memorial Day slump; however, the market was surprised by a strong build in crude inventories – a large increase of 3.3 million barrels. This figure re-emphasized that the market continues to see a substantial glut in crude inventories, resulting in high production rates putting downward pressure on prices per barrel.
At the end of last week, Baker Hughes, Inc. released its latest rig count report, revealing eight oil rigs had been added for the week. The U.S. now has 741 active oil rigs, an impressive number considering global concerns about the oversupply of crude in the market causing prices to trend downward. As expected, the continued growth puts more oil in the pipeline for gasoline production. With refineries still processing a lot of gasoline – measured in EIA’s recent report at over 17.5 million barrels per day – and a drop in demand, gasoline stocks around the country are continuing to grow. Price drops at the pump reflect this trend, and as the summer driving season zooms ahead, U.S. drivers may see drops continue into July and August.
Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad, and Android. The app can also be used to map a route, find discounts, book a hotel, and access AAA roadside assistance. Learn more at AAA.com/mobile.