Local Prices Stable as California Gas Prices Skyrocket

Today’s national average price for regular unleaded gasoline is $2.77 per gallon. The average is just fractions of a penny more than a week ago and is at the lowest mark for this date in nearly five years. The steady national average obscures dramatic weekly price movement in several states including California (+28 cents) Indiana (-12 cents) and Michigan (-11 cents).

Nationally, the retail average has fallen for 19 of the past 30 days and is three cents per gallon less than the 2015 peak price of $2.80 per gallon (June 15). Many consumers continue to save at the pump with national prices down three cents per gallon month-over-month, and yearly comparisons show the full extent of savings with an 85 cent per gallon discount.

Locally, prices in South Jersey remained the same this week as last for a gallon of unleaded gas ($2.53). This prices is three cents less per gallon than one month ago ($2.56), and 98 cents less than one year ago ($3.51). 

Drivers in California are once again weathering sharp increases in gas prices due to reports of tightening supply in the state. The state average has climbed by 22 cents per gallon since Friday and drawn the attention of the California Energy Commission, which is now investigating the fundamentals behind this most recent spike. Early reports indicate that the despite refineries exceeding last year’s production rates, higher than expected demand for gasoline has resulted in significant drawdowns in supply and distribution systems have been unable to keep pace. Suppliers often operate in “just-in-time” gasoline inventories—supply is delivered only as demand requires—which limits storage costs, but can lead to significant spikes in price when supply and demand are out of balance. Upward pressure is likely to remain on prices in the region until supply issues are resolved.

On the heels of this price surge, California ($3.72) is once again the nation’s most expensive market for retail gasoline. The state is followed by regional neighbors: Alaska ($3.47), Hawaii ($3.34), Nevada ($3.25) and Washington ($3.20) as the top five most expensive markets for retail gasoline. On the other end of the spectrum, motorists in South Carolina ($2.41) and Mississippi ($2.46) are paying the least to refuel their vehicles. 

While a handful of states have seen prices rising and falling sharply, pump prices have been relatively stable across much of the country over the past seven days, moving by +/- 2 cents in 42 states and Washington, D.C. Averages are down in 30 states week-over-week, with prices in Indiana and Michigan reflecting the only double-digit savings. Drivers in 20 states and Washington D.C. have seen prices climb higher over this same period. 

Month-over-month prices are down in 33 states, with the largest savings in the Midwest: Indiana (-26 cents), Michigan (-13 cents), Ohio (-10 cents) and Illinois (-10 cents), largely due to the resolution of lingering refinery issues in the region. Retail averages moved higher in 17 states and Washington, D.C., over this same period, led by California (+17 cents), Idaho (+11 cents) and Washington (+11 cents). A total of seven states are paying a nickel or more per gallon than a month ago.  

Consumers in every state and Washington, D.C. continue to enjoy significant yearly discounts in the price for retail gasoline. Pump prices are down 75 cents or more in 44 states and Washington, D.C., and drivers in Connecticut (-$1.04) and Hawaii (-$1.00) are saving $1 or more per gallon in comparison to this same date last year. 

Domestic supply factors continue to influence gas prices in some states. However, lower global crude oil prices are contributing downward pressure on gasoline prices across the nation. The impact of the Greek debt crisis and diplomatic negotiations with Iran pushed the price of West Texas Intermediate crude oil to multi-month lows over the past week. Greece’s default on its International Monetary Fund loans has fueled concerns regarding the impact on other Eurozone economies. A reported agreement in Brussels today could alleviate these concerns, but political considerations in Greece remain front and center for market watchers. Negotiations with Iran are reportedly nearing a conclusion and could include the lifting of sanctions that would return Iranian crude oil to an already oversupplied global market. Both international events have the potential to put additional downward pressure on price and contribute to the oversupply that currently characterizes global oil markets.  

After temporarily dropping below the $52 per barrel mark during Friday’s trading session, WTI prices recovered most of their losses at the close of formal trading on the NYMEX to close the week down four cents at $52.74 per barrel.

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.