As of yesterday, some 44 percent of gas stations nationwide were selling gasoline for $2.00 per gallon or less, compared to fewer than one in 1,000 on this same date last year. Less than one percent of stations nationwide are selling gasoline for more than $3.00 per gallon, compared to 11 percent of stations one year ago.
With gasoline supplies high and oil prices low, pump prices are likely to remain relatively cheap through the remainder of the summer and into the fall. This comes even as U.S. drivers are on track to shatter the all-time record for total miles driven in a year. Provided the next month does not bring a major market-moving event, like a major hurricane or escalating geopolitical tensions overseas, pump prices are likely to remain at relatively low levels. It is even possible that the national average price of gas may dip below $2.00 per gallon after the summer driving season ends and refineries switch over to less expensive winter-blend gasoline on September 15.
- Gas prices in fifteen states are now below $2.00 per gallon: South Carolina ($1.81), Alabama ($1.86), Tennessee ($1.89), Mississippi ($1.89), New Jersey ($1.90), Virginia ($1.91), Arkansas ($1.92), Delaware ($1.94), Louisiana ($1.95), Texas ($1.98), Missouri ($1.97), Oklahoma ($1.97), Georgia ($1.98), Kentucky ($1.98) and North Carolina ($1.97).
- Despite year-over-year savings, the West Coast remains the most expensive market for gasoline, including the only four states where drivers are paying an average of more than $2.50: Hawaii ($2.73), California ($2.66), Washington ($2.62), and Alaska ($2.59).
West Coast pumps feature both the highest prices in the country and the most dramatic yearly savings. The largest year-over-year declines in the nation are seen in California (-95 cents), Alaska (-85 cents), and Nevada (-76 cents). Contributing to these substantial yearly savings is the fact that there have been relatively few refinery issues this summer compared to a number of regional issues in the summer of 2015.
Gas prices in the Rocky Mountains continue to be among the most stable in the nation, due to their insulated status in the center of the nation and minimal disruptions to regional production this spring and summer. Barring any refinery issues at those facilities supplying the region or a sudden increase in crude oil prices, pump prices in these states are likely to remain relatively flat through Labor Day.
Great Lakes and Central States
As has been a regular refrain in recent years, gas prices in the Great Lakes region continue to be the most volatile in the nation, with tightening supplies and refinery issues temporarily sending prices sharply higher. The past week has been a microcosm of this effect as the region has featured the three most dramatic increases in the nation (Michigan +14 cents, Illinois +7 cents, and Ohio +7 cents) as well as the largest decrease (Indiana -7 cents). In last week’s AAA Gas Price Report, Indiana featured the largest weekly increase (+10 cents). Wholesale gasoline prices in the Great Lakes region spiked last week following reported issues at the BP facility in Whiting, Ind. (the region’s largest refinery), which built on recent data from the Energy Information Administration showing that regional supplies, while still robust, are tightening. Much of these gains were reversed on Friday when outlets reported that the refinery issue had been resolved, so it is likely next week’s report will once again feature the region as experiencing significant declines.
Prices in the Central United States are not immune to volatility of those in the Great Lakes, however drivers in the Central region continue to pay among the cheapest pump prices in the country, including four states where prices are now below $2.00: Tennessee ($1.89), Missouri ($1.97), and Oklahoma ($1.97).
Mid-Atlantic and Northeast
Pump prices in the Mid-Atlantic and Northeast continue to drop at a steady rate, with prices across the region falling a couple of cents over the past week. No state in the region is in the top-ten prices in the nation and three other states in the region (New Jersey, Virginia, and Delaware) are now below $2 per gallon.
South and Southeast
While drivers across much of the South and Southeast are enjoying pump prices below $2 per gallon, a reported 3.3-million-barrel decline in regional gasoline stocks has caused wholesale prices to rise over the past week, which could contribute to an uptick in retail prices paid by motorists. Motorists in South Carolina, Alabama, Mississippi, Arkansas, Louisiana, and Texas are enjoying pump prices among the top ten lowest in the nation. The Gulf Coast is home to the bulk of U.S. refining capacity, which should keep prices relatively low for drivers, barring a hurricane or other unexpected event.
Oil Market Dynamics
Strong global oil production and a strengthening U.S. dollar have contributed to West Texas Intermediate crude oil trading near lows not seen since Spring. One item market-watchers are considering this morning is the news that OPEC may again consider production limits by cartel members in an effort to boost oil prices by curbing supply. OPEC will hold an informal meeting in Algeria in late September, where member countries Ecuador and Venezuela will call for measures to cut production. Similar efforts earlier this year were unsuccessful, as members opted to preserve market share by maintaining production, which has preserved the global state of oversupply and resulted in low oil prices. If OPEC members agree to limit production, crude oil prices could again rise as demand moves into balance with supply. At the close of Friday’s formal trading session on the NYMEX WTI was down 13 cents to settle at $41.80 per barrel.