After 123-Day Slide, Gas Prices Turn Higher

After falling a record 123 consecutive days, the national average price for regular unleaded gasoline inched upward on Tuesday, Jan. 27 by fractions of a penny. Today’s price of $2.06 per gallon represents a total increase of two cents per gallon since once week ago, but remains 16 cents less than one month ago and $1.22 less than one year ago.

Gas prices have begun to increase due to a series of refinery issues in the Midwest and because crude oil prices are trading at more stable levels following a multi-month selloff.

Similar to years past, the national average is expected to rise in the coming months due to the seasonal demand increase and refinery maintenance. However, global oil prices continue to register multi-year lows with supply outpacing demand, and barring any events that cause the global price to increase substantially, AAA expects that the U.S. average will remain below $3 per gallon throughout 2015.

Increasing prices are reflected across the country with 25 states registering averages below $2 per gallon, which is down three states from last week’s report. Idaho ($1.85) is joined by Texas ($1.87) and Oklahoma ($1.87) as the nation’s least expensive markets for retail gasoline. Hawaii ($3.11) remains the only state posting an average above $3 per gallon, followed by Alaska ($2.64), California ($2.45), Washington, D.C. ($2.39) and New York ($2.39) as the top five most expensive markets. 

Locally, gasoline prices actually dipped a bit in South Jersey. Today’s average price of $1.85 for a gallon of unleaded fuel is one cent less than one week ago ($1.86), 39 cents less than one month ago ($2.24); and $1.35 less than one year ago ($3.20). 

Weekly price comparisons are a bit more balanced than prior weeks, largely due to prices beginning to rise in a number of states. Motorists in 27 states and Washington, D.C. are saving at the pump. Hawaii (-13 cents) is the only state posting a double-digit savings week-over-week, and the price is down by a nickel or more in a total of three states including Alaska (-8 cents) and Vermont (-5 cents). On the other end of the spectrum, drivers in 23 states are paying a bit more to refuel their vehicles over the past week. The largest price increases are in the Midwestern states of Ohio (+15 cents), Michigan (+14 cents) and Illinois (+13 cents), where refinery issues are keeping upward pressure on the price at the pump. A total of 10 states have seen the price creep a nickel higher or more since one week ago.

The majority of consumers in the U.S. are still enjoying month-over-month savings, with the exception of Indiana (+23 cents), Michigan (+17 cents), Ohio (+12 cents) and Illinois (+1 cent) where the price has moved higher. The average price has dropped in 46 states and Washington, D.C., over this same period and motorists in Wyoming (-43 cents), Utah (-40 cents) and Hawaii (-38 cents) are saving the most per gallon. Thirty-nine states and Washington, D.C. are saving more than a dime and 21 states are posting monthly savings of a quarter or more per gallon.

Year-over-year calculations continue to reflect the most dramatic savings in the price of retail gasoline. With the exception of Hawaii (-91 cents), drivers every state and Washington, D.C. are saving at least $1 per gallon at the pump. Connecticut (-$1.38), Maine (-$1.37), Rhode Island (-$1.35) and Arizona     (-$1.33) are registering the largest savings over this period, joined by 10 additional states where the price at the pump is discounted by $1.25 or more per gallon.    

Global oil prices are expected to remain relatively low during the first half of 2015, largely due to OPEC’s paradigm-shifting decision not to support higher oil prices by cutting production. Saudi Arabia, a key player in the decision and OPEC’s largest producer, is well positioned to weather the current volatility due to low production costs and a significant amount of savings accumulated during years of relatively high crude prices.

The ripple effects of sharply lower prices for crude are beginning to surface in both high-cost production countries as well as in producer nations that depend on oil revenue to balance budgets and provide social services to citizens. Production companies around the globe are challenged with the decision of either cutting investments or continuing to supply the market at dramatically lower profit margins. Reports have begun that some of these higher cost production projects are already opting to scale back investments and near-term spending, which could put some upward pressure on the global market for crude oil.

At the close of Friday’s formal trading on the NYMEX, WTI was up $3.71 to settle at $48.24 per barrel, which was the highest settlement in about two weeks.