Thursday, 08 June 2017 18:39

Gas Prices Hover Near $2 Per Gallon

Drivers paid the lowest averages for the Christmas holiday since 2009, and pump prices continue to hover around the $2 benchmark. Retail averages have fallen for 45 of the past 52 days, and despite prices moving higher by fractions of a penny on the week, today’s average price of $1.999 is the lowest for this date since the Great Recession. Monthly and yearly discounts persist, and consumers are saving five cents per gallon versus one month ago, and 30 cents per gallon versus this same date last year.

Leading into 2016, the national average is expected to continue to slide because supply should continue to outpace demand. Gas prices typically fall during this time of year as demand for gasoline decreases, and many motorists will remember the fourth quarter of 2014 when pump averages tumbled from $3.33 on October 1 to $2.26 on New Year’s Eve. While seasonal price declines are again reflected across much of the country, prices on the West Coast have moved higher following supply issues in California. Earlier in the year, ExxonMobil’s Torrance, CA refinery unexpectedly went offline, and as a result, prices spiked in the region. Ongoing and unexpected refinery maintenance has kept production from returning to normal levels, and new problems have tightened supply within the region and once again sent prices higher. This regional challenge could keep the national average higher than we would otherwise see, and contribute to volatility to close out the fourth quarter of 2015.

The majority of states (32) are posting averages below $2 per gallon. Consumers in Missouri ($1.70) and Kansas ($1.75) are paying the nation’s lowest averages for retail gasoline and are joined by an additional 16 states with averages below $1.90 per gallon. On the heels of lingering refinery issues, California ($2.83) surpassed Hawaii ($2.69) as the nation’s most expensive market for gasoline. As a result of these issues, averages across the region have moved higher and regional neighbors Nevada ($2.51), Washington ($2.46) and Alaska ($2.42) round out the top five most expensive markets.

Weekly price comparisons reflect this regional volatility, and state averages have moved by more than a nickel per gallon in both directions. Of the 11 states where pump prices are up week-over-week, motorists in California (+11 cents), Ohio (+8 cents), Michigan (+8 cents) and Indiana (+6 cents) are paying premiums of more than a nickel per gallon. Pump prices are discounted on the week in 39 states and Washington, D.C., with the largest savings experienced by consumers in Montana (-8 cents) and Missouri (-7 cents).

Motorists in 42 states and Washington, D.C. are benefitting from monthly savings in the price to refuel their vehicles. Retail averages are discounted by more than a nickel per gallon in 38 states and Washington, D.C., and averages are down double-digits in 19 states. The largest savings over this period are seen in the midcontinent states of Montana (-28 cents), North Dakota (-16 cents), Wyoming (-16 cents) and South Dakota (-15 cents). On the other end of the spectrum, pump prices have moved higher in eight states since one month ago, although in a less dramatic fashion, with the largest increases in California (+13 cents), Michigan (+8 cents) and Illinois (+5 cents).

For the first time in 2015, motorists in California (+16 cents) are no longer experiencing year-over-year discounts in the price to refuel their vehicles due to ongoing supply challenges. Annual discounts persist for drivers in every other state and Washington, D.C., but continue to diminish. Hawaii (-85 cents) is the only state where drivers are saving more than 75 cents per gallon versus one year ago, and the price per gallon is down by more than 25 cents in a total of 36 states and Washington, D.C. year-over-year.

The impact of the U.S. removing its decades-old ban on crude oil exports has narrowed the difference between West Texas International crude oil and Brent prices, and pushed the price of WTI above Brent last week for the first time since August 2010. Oversupply continues to characterize the global oil market, and the impact of parity between the two benchmarks is now being discussed based on its ability to impact both domestic production and the global energy landscape.

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