Gas Prices Hovering at All-Time Low for the Year

Despite a surge in gasoline demand on the week, the national average price for gasoline is nearing an all-time low for the year at $2.26/gallon. February of this year was the last time the price of a gallon of regular unleaded gasoline was this low nationally. 

On the week, gas prices fell in all but three states (Indiana, Ohio and Michigan) while all regions, except the Southeast, saw gasoline inventories drop. This is good news for people planning to travel for the Independence Day holiday. AAA forecasts 37.5 million American will drive to their holiday destination, which potentially can mean a small increase in holiday weekend gas prices. Today, consumers can find gas for $2.24 or less at 60 percent of gas stations in the country.

The price of gas has fallen for 24 consecutive days. Today’s national average is three cents cheaper than a week ago and eleven cents cheaper than a month ago. Heading into Independence Day weekend, gasoline is four cents less than a year ago. Record refinery rates, high gasoline and crude inventory, and less-than-favorable demand this year are among the contributing factors causing the downward price trend.

Locally, South Jersey motorists are paying an average of $2.19 for gallon of unleaded gas. This is a 6-cent decrease from last week ($2.25), and 14-cent decrease in the past month ($2.33). However, today’s price is still 15 cents per gallon more than this time last year.

Quick Stats

• The nation’s top ten markets with the largest yearly changes: Hawaii (+26 cents), Illinois (-22 cents), New Jersey (+19 cents), Ohio (-18 cents), Utah (+18 cents), Alaska (+17 cents), Wisconsin (-16 cents), Washington (+16 cents), Oklahoma (-15 cents) and Oregon (+14 cents).
• The nation’s top ten markets with the cheapest gas this week include: South Carolina ($1.93), Oklahoma ($1.95), Alabama ($1.99), Mississippi ($2.00), Missouri ($2.01), Tennessee ($2.02), Arkansas ($2.02), Virginia ($2.03), Texas ($2.06) and Kansas ($2.07).

Mid-Atlantic and Northeast 

Gas prices have declined in every Mid-Atlantic and Northeast state, on average by three cents on the week, and in-line with the national trend. However, the price drop is an outlier given the region made the country’s largest gasoline inventory draw on the week (1.4 million bbl). With the draw, the region is sitting with gasoline inventories below a year ago levels. The draw indicates a surge in demand, which if continues could shoot gas prices on an upward trend in the week. Washington, D.C. ($2.46) and Pennsylvania ($2.45) lead the region with the most expensive gas.  

Oil Market Dynamics

On Monday morning, the price per barrel of West Texas Intermediate crude oil opened at just above $43. The opening price follows a turbulent week for the market, where prices moved to their lowest level in 10 months. Last week’s report from the EIA showed that demand for crude oil remains robust as gross inputs at U.S. refineries have topped 17 million b/d in each of the past nine weeks. However, crude oil inventories remain high, with current storage levels near 500 million bbl, which is approximately 9 million bbl ahead of last year. Moreover, when looking at 5-year crude oil storage trends, the surplus is even more eye-opening: roughly 82 million more barrels are in storage now than five years ago. Last week, Baker Hughes, Inc. reported that the U.S. oil rig count grew by 11 last week, landing at 758 rigs – a three year high. The data points toward the rising tide of crude oil, which has contributed to prices dropping at the pump for drivers, and has helped to push the price per barrel down. The cheaper price per barrel has contributed to refineries producing record amounts of gasoline for most of the year.

Last week, the EIA noted that U.S. refinery capacity has increased by 659,000 barrels per day since mid-August 2015, which is the equivalent of building a new refinery in the U.S.  Additionally, EIA highlighted that recorded weekly refinery gasoline output rates have hit their 24 highest points since the summer of 2015. This growing trend means that refineries are producing a record amount of gasoline that has easily met increasing demand from drivers and has left gasoline stockpiles at high levels. Meaning, the national gas price average will likely continue to drop until demand can surge to chip away at the surplus. However, Independence Day Weekend has the possibility to be an outlier.

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.