For the first time in five weeks, the national average gas price is increasing. At $2.26, today’s price has been moving higher since July 6 and is three cents more than last week. The moderate price surge follows a week of solid demand growth and a third straight week of gasoline inventory drawdowns across the country.
“Gas prices are still at some of the cheapest prices we’ve seen this year, but consumers should take advantage of them while they can,” said Jeanette Casselano, AAA spokesperson. “This week, drivers in 31 states are paying more than last week for a gallon of gas. And we expect to see slight price increases throughout July, so now’s the time to hit the road.”
Of the states seeing jumps in gas prices, Indiana, Ohio, Michigan and Kentucky top the charts with double-digit increases. Thirteen states, mostly on the West Coast and in the Rockies, saw prices decrease by pennies. Across the country, consumers can find gas for $2.25 or less at 58 percent of gas stations.
- The nation’s top ten markets with biggest weekly increases are: Indiana (+15 cents), Ohio (+15 cents), Michigan (+13 cents), Kentucky (+11 cents), West Virginia (+7 cents), Delaware (+6 cents), Kansas (+5 cents), Oklahoma (+5 cents), Nebraska (+4 cents) and South Carolina (+4 cents).
- The nation’s top ten least expensive markets are: South Carolina ($1.94), Alabama ($1.96), Mississippi ($1.98), Arkansas ($2.00), Tennessee ($2.01), Oklahoma ($2.01), Missouri ($2.02), Virginia ($2.03), Louisiana ($2.05) and Texas ($2.05).
Gas prices decreased in four states on the West Coast on the week: Alaska saw the biggest drop of five cents, with gas prices in Arizona, California and Nevada only trickling down one penny. Oregon increased one penny at the pump, while Hawaii and Washington saw no change. The West Coast continues to carry the most expensive gas prices in the country: Hawaii ($3.05), California ($2.93), Washington ($2.81), Alaska ($2.78), Oregon ($2.67), Nevada ($2.64) and Arizona ($2.25).
West Coast gasoline production reached 1.7 million b/d – the highest mark since August 2016 – for the week ending June 30, according to the Energy Information Administration (EIA). Meanwhile, stockpiles dropped for the fourth consecutive week, drawing 700,000 bbl. The drawdown brings the region’s supply levels to 28.3 million bbl, up nearly 400,000 bbl compared to last year.
All states in the Rockies region, with the exception of Colorado, saw prices decrease on the week: Idaho (-2 cents), Montana (-2 cents), Idaho (-2 cents) and Wyoming (-1 cent). Colorado’s gas price remained flat at $2.25. The downward price trend kicks in as stock levels fall across the region for four consecutive weeks. Today’s stockpiles are 776,000 bbl lower than last year, according to the EIA.
Great Lakes and Central States
All states in the Great Lakes and Central states saw gasoline prices increase on the week, on average by six cents. Five states saw some of the country’s largest price increases this week: Indiana (+15 cents), Ohio (+15 cents), Michigan (+13 cents), Kentucky (+11 cents) and Kansas (+5 cents). As gas prices increase, stockpiles fell in the region by 1.2 million bbl, indicating an increase in regional demand.
Indiana is one of six states in the country enacting a gas tax rate increase that went into effect on July 1, according to the Tax Foundation, which is also contributing to the jump in the state’s gas price.
South and Southeast
Florida was the only state in the South and Southeast to see gas prices increase on the week, albeit by only a penny. Alabama and Arkansas saw no change, while gas prices in all other states decreased by two cents on average across the region – South Carolina and Georgia had the largest drop (-4 cents). The region continues to carry the country’s cheapest gasoline prices: South Carolina ($1.94), Alabama ($1.96), Mississippi ($1.98), Arkansas ($2.00), Tennessee ($2.01), Oklahoma ($2.01), Missouri ($2.02), Louisiana ($2.05) and Texas ($2.05).
Regional refineries continue to run at high utilization rates. In fact, the region was the only in the country to see gasoline inventories build (300,000 bbl) on the week.
Mid-Atlantic and Northeast
Drivers in West Virginia and Delaware are paying considerably more for a gallon of gasoline on the week, seven and six cents more, respectively. Prices also increased in Maryland (+ 3 cents), Pennsylvania (+3 cents), Virginia (+2 cents), North Carolina (+2 cents) New Hampshire (+1 cent) and Maine (+1 cent). Only New York and Vermont saw prices drop by one penny. On the week, gas stockpiles decreased by 2 million bbl and currently sit 5.6 million bbl below levels this time last year, according to the EIA.
In West Virginia and New Jersey, part of the increase stems from new gas taxes that went into effect on July 1. Also, New Jersey implemented the second part of a diesel tax increase passed in 2016.
Oil Market Dynamics
Last week’s market losses continued into Monday morning, with West Texas Intermediate opening just below $44 per barrel. Last week’s EIA report showed encouraging trends for the market, revealing increased gasoline demand and a decrease in crude storage levels. For gasoline, the week ending on June 30 saw demand at 9.705 million b/d – representing a 167,000-b/d increase from the previous week. Crude oil storage levels were down by 6.3 million bbl. Typically, these figures would lead the market to believe that increasing gasoline demand is beginning to drain the glut of crude that has kept prices low for most of the year.
However, two new pieces of information have led the market to believe that the glut of crude oil may be replenishing at a faster rate than expected:
- Baker Hughes, Inc. reported that the U.S. added 7 oil rigs last week. The total number of rigs stands at 763, diminishing belief that last week’s decrease in the number of rigs could have signaled a new trend of slowing production levels in the U.S.
- Over the past two weeks crude oil output from Libya, a member of OPEC but exempt from OPEC’s agreed production cuts through March 2018, has increased to more than 1 million b/d for the first time since 2013. Coupled with Nigeria’s increased output and exemption from the agreed OPEC cuts of 1.8 million b/d, rising production from both countries could thwart OPEC’s efforts to rebalance the market. Over the weekend, OPEC officials stated that there will be conversations held with both countries over the next few weeks to discuss their respective production levels. These conversations will be held in advance of OPEC’s July 24 Joint Ministerial Monitoring Committee meeting in St. Petersburg, Russia, where Libya and Nigeria may be invited to discuss collective efforts to reduce global supply. One possible outcome of that meeting could be a recommendation for Nigeria and Libya to join OPEC’s reduction agreement with non-OPEC countries.
“In the meantime, drivers are beginning to see increased prices at the pump mainly due to increased demand as a result of cheaper prices than usual for the summer driving season,” added Casselano. “Just how far those price increases will extend may depend on the outcome of OPEC’s efforts to further constrain the global supply of crude oil.”
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.