The national average price for regular unleaded gasoline has dropped six consecutive days after rising for 16 straight days to close out August. Today’s national average is $2.20 per gallon. Gas prices started turning lower heading into the Labor Day weekend, which marks the unofficial end to the summer driving season. Today’s national average is two cents less than a week ago and 18 cents less than a year ago but 8 cents more than one month ago. The year-on-year discount persists but has closed more than 30 cents in just 20 days.
Prices rose in the second half of August due to increasing crude oil prices and uncertainty regarding Hurricane Hermine’s impact on Gulf Coast refineries. When it became clear that the storm would not impact production, prices dropped quickly during the second half of last week and through the weekend. While the possibility of future storms over the remaining months of hurricane season could send prices temporarily higher, the seasonal effects of lower demand – with the busy summer driving season in the rear view – combined with the changeover to cheaper-to-produce winter blend gasoline likely mean prices will move lower over the next several months.
- Gas prices in four states are below $2.00 per gallon: South Carolina ($1.94), Alabama ($1.97), Mississippi ($1.98) and New Jersey ($1.99).
- The biggest weekly price decreases are reflected in Michigan (-11 cents), Missouri (-7 cents), Oklahoma (-7 cents), Illinois (-6 cents), Minnesota (-4 cents), Ohio (-4 cents), Alaska (-3 cents), Iowa (-3 cents), Kentucky (-3 cents) and South Dakota (-3 cents).
The region continues to be the priciest in the nation, with the seven most expensive state averages: Hawaii ($2.75), California ($2.67), Washington ($2.64), Alaska ($2.53), Oregon ($2.46), Idaho ($2.46) and Nevada ($2.45). The region currently has the highest wholesale price for gasoline, which translates to higher prices for drivers. While prices remain on the high-end, they are relatively steady and have so far not reacted to refinery issues that arose late last week at Chevron’s Richmond, California refinery and Tesero’s Martinez, California location. Both refineries are reporting unscheduled maintenance that could impact supply in the region and send prices higher until the issues are resolved.
Drivers across the Mountain time zone are enjoying hefty yearly discounts with seven states in the top ten in the nation: Utah (-53 cents), Colorado (-50 cents), Wyoming (-47 cents), Arizona (-41 cents), Idaho (-39 cents), New Mexico (-39 cents), and Montana (-35 cents). Refiners in the region have access to some of the cheapest crude oil on the market and as a result prices in the region are often geographically insulated from pump price movement tied to global crude oil prices. Given the price insulation and already lofty discounts, prices in this area may have less room to fall than coastal and Great Lakes areas as the busy summer driving season comes to a close.
Great Lakes and Central States
Price swings have been common in and around the Great Lakes states this week with six of the top ten weekly price movers landing in the area. The top national decreases in the country are: Michigan (-11 cents), Missouri (-7 cents), Oklahoma (-7 cents), Illinois (-6 cents), Minnesota (-4 cents) and Ohio (-4 cents). Prices rose last month following issues at the BP refinery in Whiting, Indiana, but with production reported to have returned to normal, prices in the region have moved lower. Despite the fluctuating prices across the region, two Central region states still rank among the lowest in the nation: Missouri ($2.02) and Tennessee ($2.02).
Mid-Atlantic and Northeast
Prices across much of the Mid-Atlantic and Northeast remain relatively flat even as prices nationally have started to fall. Despite the minimal movement, two states in the region are among the six cheapest in the country: New Jersey ($1.99) and Virginia ($2.01). Barring any unexpected impact to production or distribution, prices in the region should continue to drop this month due to a decrease in demand and the switch over to cheaper winter-blend fuel on September 15.
South and Southeast
Early projections about the impact Hurricane Hermine might have on production and distribution over the busy holiday travel weekend triggered price movement in the Gulf Coast and Southeastern regions last week. Hermine eventually passed with minimal impact on the area and prices have dropped as a result. These regions continue to post some of the lowest pump prices in the nation, including all three of the cheapest states and six of the top ten. Only four states in the country are paying below $2 per gallon and three are located in this region: South Carolina ($1.94), Alabama ($1.97) and Mississippi ($1.98).
Oil Market Dynamics
After jumping more than 20 percent during the first half of August, the price of West Texas Intermediate crude oil has dropped 10 percent over the past several weeks. The forces driving the market continue to be the strength of the U.S. dollar relative to other global currencies and the potential for OPEC and non-OPEC members to agree to a freeze in oil production when countries meet in Algiers later this month. Monday evening brought reports that Saudi Arabia and Russia met during the G20 summit and signed an oil cooperation agreement signaling an effort to work together in the world oil market. The possibility of an agreement briefly caused oil prices to rally, but when it was clear that the two countries did not make a firm commitment to halt production, prices again started to slide. Traders will continue to monitor these factors in the coming weeks for guidance on what direction oil markets will move this fall. At the close of Friday’s formal trading session on the NYMEX, WTI was up $1.28 to settle at $44.44 per barrel.
Drivers 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.