Pump prices are holding relatively steady and remain at their lowest levels for this time of year since 2005. Today’s price of $2.31 per gallon represents a savings of three cents per gallon on the week and two cents per gallon on the month. Year-over-year drivers continue to benefit from noticeable discounts in the price to refuel their vehicles, and prices are down 47 cents per gallon versus this same date last year.
This year’s summer driving season is likely to set new records for both gasoline demand and vehicle miles traveled, and the latest data from the U.S. EIA shows that gasoline demand is currently at an all-time high. Strong demand can put additional pressure on refineries, and their ability to sustain output and keep gasoline flowing to markets directly impacts the price consumers pay at the pump. However, refineries are reportedly increasing output and gasoline supply has more than kept pace with growing demand. In fact, the refinery utilization rates reached its highest level since April and gasoline inventories posted an increase in the face of these record numbers. Gas prices have fallen for 16 consecutive days, and if the market can remain adequately supplied drivers are likely to continue paying prices unseen for the summer months in more than a decade.
- The West Coast leads the market and is posting some of the nation’s highest prices at the pump, led by: California ($2.90), Hawaii ($2.79), Alaska ($2.66), Washington ($2.65) and Nevada ($2.55)
- The nation’s least expensive markets are: South Carolina ($2.00), Mississippi ($2.06), Arkansas ($2.07), Alabama ($2.09) and Oklahoma ($2.09).
Gas prices on the West Coast remain some of the highest in the nation, with nearly every state in the region represented in the rankings of the nation’s top 10 most expensive markets. Prices have moved higher on the week in almost every state in the region, and averages in the market’s leader California ($2.90) are within a dime of the $3 per gallon benchmark. Despite this trend of increasing averages, the region continues to lead the market posting some of the largest year-over-year savings, thanks to lower crude oil prices and comparatively more supply. Drivers in every state located in the region are saving at least 50 cents per gallon on the year, with the largest discounts in price experienced by drivers in Alaska (-80 cents), Nevada (-65 cents), Oregon (-62 cents) and Hawaii (-58 cents).
According to the U.S. EIA, gasoline production on the West Coast is at a two-year high and refineries overall are keeping up with growing demand. Issues that could potentially impact the ability of refineries to continue to supply the market were reported late in the week, and pump prices may fluctuate in the near term as a result. A natural gas storage facility in Southern California was shut down due to a leak. Refineries rely on natural gas to produce transportation fuels, and this reduction could impact the region’s gasoline supply. Additionally, an intrastate crude oil pipeline that is connected to nearly every local crude oil production site and to six Los Angeles area refineries also reported a leak. The pipeline was already operating at a reduced rate when the spill was reported, and although clean-up, mitigation and recovery efforts are currently underway this too may also impact pump prices in the region.
Pump prices are down on the week in the Rocky Mountain states and averages remain below the $2.50 per gallon benchmark. Consumers in Utah (-65 cents) are benefitting from yearly savings of more than 50 cents per gallon and gas prices are expected to hold relatively steady during the summer months.
Drivers in the Great Lake states are experiencing a bit of relief at the pump, following a string of issues that caused prices to move noticeably higher in the region over the past few weeks. Illinois ($2.48) and Michigan ($2.46) are the only two states in the region ranked in the nation’s top 10 most expensive markets; however, averages in both states are down on the week. Gasoline supplies are reportedly recovering in the region, which is also home to states posting the nation’s largest weekly savings, led by: Indiana (-16 cents), Ohio (-16 cents), and Michigan (-13 cents).
Mid-Atlantic and Northeast
Retail averages held relatively steady week-over-week in the Mid-Atlantic and Northeastern region, moving by +/- 2 cents per gallon over this period. Washington, D.C. ($2.55) is the only state located in this region with an average price above $2.50 per gallon and prices on the whole remain moderate. Consumers in Delaware (-53 cents), New York (-52 cents), Connecticut (-51 cents) and New Jersey (-50 cents) are all saving 50 cents or more per gallon year-over-year. Gasoline supplies fell on the week, but the market remains well supplied, and prices are expected to remain moderately priced this summer, barring any major disruptions in supply.
Southeastern states continue to dominate the rankings of the nation’s least expensive markets for gas. South Carolina ($2.00) is the nation’s least expensive market for retail gasoline, is followed by regional neighbors Mississippi ($2.06), Arkansas ($2.07), and Alabama ($2.09) in the rankings. Gas prices have moved by +/- 3 cents per gallon in the region week-over-week and are expected to remain on the lower end of the spectrum in the near term. A wildcard for gas prices in the region is the Atlantic Hurricane Season. Prices could become volatile due to severe weather which could impact both production and distribution.
Oklahoma ($2.09), Tennessee ($2.10) and Missouri ($2.11) are ranked in the nation’s top 10 least expensive markets, and prices in the Central States are expected to remain relatively lower. On the whole, weekly and monthly price comparisons show that prices are holding steady and with a few exceptions have moved by +/- 2 cents per gallon over these periods.
Oil Market Dynamics
The United Kingdom’s decision to exit the European Union, also known as the “Brexit,” reportedly contributed to WTI closing out the week at its steepest one-day loss since October. The global oil market has been characterized by extreme oversupply for the better part of the year, but the tide appeared to be turning thanks to record gasoline demand from the U.S. and expectations that demand from other nations would also grow. The Brexit put a damper on these speculations because it contributed to the U.S. dollar gaining strength. A strong dollar makes crude oil more expensive for countries holding other currencies, which limits purchasing power, and could reduce global crude oil demand. The full impact of the Brexit remains unknown and both benchmarks opened the week trading lower.
At the close of Friday’s formal trading session on the NYMEX, WTI was down $2.47 and settled at $47.64 per barrel – this represents a loss of 34 cents per barrel on the week.
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.