Nationally, the price of a gallon of gasoline increased one cent to $2.38 from last week; however, the price at the pump in 30 states has fallen as much as four cents. The moderate decline in gasoline prices is typical following a long holiday weekend. Historically, the first three weeks of June generally can indicate whether consumers will sustain gasoline demand into summer months. Today’s national average is two cents more than both a month and year ago.
- American drivers used a record 413 million gallons/day of gas during the week ending on May 26.
- The nation’s top ten markets with the biggest changes in the last week include Indiana (+7 cents), Michigan (+7 cents), Florida (+6 cents), Ohio (+6 cents), Utah (+4 cents), Illinois (-4 cents), Delaware (-3 cents), Missouri (-3 cents), Oklahoma (-3 cents) and Maryland (-3 cents).
- The nation’s top ten markets with the cheapest gas this week include South Carolina ($2.03), Alabama ($2.09), Oklahoma ($2.09), Mississippi ($2.09), Tennessee ($2.11), Arkansas ($2.12), Missouri ($2.12), Virginia ($2.15), Louisiana ($2.16) and Kansas ($2.19).
Drivers on the West Coast saw moderate declines on the week, except in Arizona where prices increased a penny. Six states in the region earned a spot on the top 10 weekly list of the most expensive markets: California ($3.09), Hawaii ($3.05), Alaska ($2.90), Washington ($2.87), Nevada ($2.74) and Oregon ($2.72).
Low combinations of gasoline storage and production levels are generating concern in the region. At 28.2 million bbl, gasoline storage levels are their lowest for the year and reflect a deficit of 1.3 million compared to 2016. In Northern California, planned and unplanned refinery maintenance has negatively affected gasoline production. In May, imports helped the West Coast meet supply demands, but prices could continue to increase in the region until refiners resume normal operations.
Trending higher, gas prices increased in Utah (+4 cents), Idaho (+2 cents) and Wyoming (+2 cents). Holding steady on the top 10 list of most expensive gas markets, Idaho’s average gas price is $2.61. With a four cent gasoline price increase, Utah earned a spot again on the top 10 list of largest weekly increases. Prices increased in Colorado (+1 cent) and remained flat in Montana. 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
Gasoline supply and demand in the Great Lakes and Central States were volatile in May, sending gasoline prices on a roller coaster ride throughout the month. The trend continues into June. While the region saw a moderate level of gasoline inventory draws last week, it appears demand is not consistent and this is causing fluctuation across the region.
In the region, three states are seeing gas prices increase as much as seven cents on the week: Indiana (+7 cents), Michigan (+7 cents) and Ohio (+6 cents). A week ago, these three states were seeing prices drop seven to six cents. However, compared to one month ago, the trio of states are paying 11 to 13 cents more. Meanwhile, gas prices in eight states decreased as much as four cents, including Illinois (-4 cents), Missouri (-3 cents), Nebraska (-2 cents), Minnesota (-2 cents), and Kansas (-2 cents).
South and Southeast
In the South and Southeast, gasoline prices are trending lower for the majority of the region with decreases of one to three cents on the week. Prices only increased in Florida (+6 cents), Louisiana (+2 cents) and Texas (+1 cent). This was the only region to see an increase in gasoline storage levels, though moderately, and decrease in crude oil inventory in the country.
Drivers in Nashville and central Tennessee are likely to see gas prices drop this summer, potentially by as much as six cents a gallon. The drop is due to the Environmental Protection Agency (EPA) giving the green light for gasoline retailers to switch over to a cheaper-to-produce, higher RVP gasoline for summer months.
Mid-Atlantic and Northeast
Across the region, every state is seeing prices at the pump drop as much as three cents, except in Maine, Vermont, New York and Connecticut where prices remained flat. Pennsylvania ($2.57) and Washington, D.C. ($2.53) earned a spot on the top 10 weekly list of the most expensive markets, while Virginia ($2.15) joins the top 10 weekly least expensive markets this week.
Oil Market Dynamics
For the second week in a row, the price per barrel of crude opened at less than $50. The opening price shows that the market is expressing serious skepticism about OPEC’s ability to rebalance global supply through its production cuts, which will now last through March 2018. Market watchers are also looking at long-awaited gasoline demand in the US to see if it will grow enough to eat away at ballooning inventories.
The EIA report for the week ending on May 26th showed some encouraging trends related to gasoline demand. It came in at a record of 9.822 million barrels per day (b/d) – 7,000 b/d ahead of the previous record from last June. However, the report also showed that week’s gasoline output from refineries topped 10 million b/d, for the fourth week in a row, and the level was the highest since early November of last year. Strong refinery output rates show that instead of diminishing existing stocks of gasoline to meet demand, refineries are continuing to replenish the gasoline they have in storage with newly produced gasoline. The result is that storage levels still remain high, so refineries can pull stocks from storage to meet higher driver demand without needing more oil to produce higher levels of gasoline.
Moreover, oil production continues to grow in the US. Baker Hughes, Inc. reported in its report last week that oil rigs grew by 11, landing at 733. This record-breaking oil exploration in the US will continue to increase crude inventories. Only time will tell if growing demand for refined products, like gasoline, will begin to chip away at global crude inventories, increasing prices per barrel – which could lead drivers to pay more at the pump.
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.