WASHINGTON, D.C. — With the height of summer in the rearview mirror, motorists are seeing some relief at the pump, as the national gas price average dropped by a penny on the week to $3.17. However, the recovery from Hurricane Ida remains slow, with the latest U.S. data showing just under half of the U.S. offshore oil production in the Gulf still idle after companies shuttered production ahead of the storm.
Meanwhile, refinery utilization is down almost 10%, causing gasoline stock levels to fall by 7.2 million bbl to 220 million bbl, according to the Energy Information Administration (EIA). Stock levels are likely to remain tight until Ida-affected refineries resume normal operations. While refineries are reporting progress towards restarting, the U.S. Department of Energy (DOE) said it would release an additional 1.5 million bbl of crude oil held at the U.S. Strategic Petroleum Reserve (SPR) to help ease tightened supplies brought by Hurricane Ida. This is the second such release, and the DOE said the SPR has now released a total of 3.3 million bbl of crude oil in response to the storm.
The constraint on stocks would typically lead to higher prices, but it has been offset by decreased demand going into the fall. In the week ahead, pump prices may be impacted by Tropical Storm Nicholas, which is expected to bring heavy rains and a storm surge to the Texas coast this week. If the tropical storm puts additional refineries offline, we are likely to see prices increase.
“Timing is everything, and while supplies have tightened due to the slow recovery after Hurricane Ida, this is also the point when gas demand starts its seasonal decline,” said Jeanette McGee, AAA spokesperson. “While there may be some price fluctuation, we expect most motorists to see stability at the pump.”
Today’s national average of $3.17 is a penny less than a month ago but is 98 cents more than a year ago.
- The nation’s top 10 largest weekly decreases: Ohio (−5 cents), Kentucky (−4 cents), Illinois (−4 cents), Indiana (−4 cents), Nevada (−4 cents), Michigan (−3 cents), Florida (−2 cents), Oklahoma (−2 cents), Utah (−2 cents) and Tennessee (−1 cent).
- The nation’s top 10 least expensive markets: Mississippi ($2.79), Texas ($2.81), Missouri ($2.83), Arkansas ($2.84), Alabama ($2.84), Oklahoma ($2.86), Louisiana ($2.89), Tennessee ($2.89), Kentucky ($2.89) and South Carolina ($2.89).
Oil Market Dynamics
At the close of Friday’s formal trading session, WTI increased by $1.58 to settle at $69.72. Crude prices remain elevated as approximately 48% of crude oil production in the Gulf Coast region is shuttered due to Hurricane Ida, according to the federal Bureau of Safety and Environmental Enforcement. As production gradually returns to normal operations, crude prices should stabilize as supply increases. Additionally, crude saw jumps last week after the EIA reported that total domestic crude inventories decreased by 1.5 million to 423.9 million bbl.
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.