Nearly All States See Price Drop at the Pump

At $2.34, the national gas price is cheaper today than it was on this day one year ago. The same trend rings true at the pump in 27 states in the southeast and Midwest – many seeing double-digit price drops. More so, in 46 states consumers are paying, on average, three cents less at the pump than a week ago.

The national price drop is due to an unexpected buildup of crude oil last week combined with ongoing high gasoline production runs, an increase in gasoline stocks and a drop in gasoline demand. If refiners continue to produce record amounts of gasoline and oversupply the market, consumers will reap the benefit and see slight fluctuations in gasoline prices (+/- a few cents) in coming weeks. However, it is not likely that gas prices will drop much lower than this week’s prices.

Locally, South Jersey motorists are paying an average of $2.29 per gallon of unleaded fuel. This represents a decrease of 4 cents per gallon from last week ($2.33), but is a 1-cent increase over the same time last month ($2.28). Today’s price is also 20 cents more per gallon than this time last year ($2.09).

Quick Stats

• The nation’s top ten markets with the largest yearly declines Ohio (-46 cents), Indiana (-41 cents), Michigan (-35 cents), Illinois (-33 cents), Kentucky (-21 cents), Wisconsin (-19 cents), Oklahoma (-11 cents), Alabama (-10 cents), Tennessee (-10 cents) and West Virginia (-9 cents).
• The nation’s top ten markets with the cheapest gas this week include South Carolina ($2.01), Oklahoma ($2.05), Alabama ($2.06), Mississippi ($2.07), Tennessee ($2.08), Arkansas ($2.09) Virginia ($2.12), Missouri ($2.13), Louisiana ($2.14) and Kansas ($2.15).
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The high inventory is leading to dropping gas prices both on the week and compared to one year ago today. This week, all states are seeing on average a four-cent decrease. Compared to one year ago, six states are seeing significantly cheaper gas: Ohio (-46 cents), Indiana (-41 cents), Michigan (-35 cents), Illinois (-33 cents), Kentucky (-21 cents) and Wisconsin (-19 cents). As inventory grows and demand remains inconsistent, the cheaper gas prices are likely to hold throughout summer in the region.

Mid-Atlantic and Northeast

Prices at the pump dropped in every state in the Mid-Atlantic and Northeast except Washington, D.C. where prices were flat. The states seeing the biggest weekly declines include Delaware (-6 cents), Maryland (-5 cents) and Pennsylvania (-4 cents). The EIA reports an 800,000-gasoline inventory build last week, bringing the total to nearly 70 million bbl. The build puts the region’s gasoline inventory above year-ago levels. And overall, compared to a year ago, gas prices are mostly reminiscent of last summer except in New Jersey, where prices are 22 cents more, and in West Virginia and Virginia where prices have fallen nine and eight cents respectively. With comparable gas prices to last summer, consumers may feel encouraged to drive more ultimately leading to an increase in demand, which could help dip into the supply levels.

Oil Market Dynamics

The oil market appears to be off to a good start this week, with the price per barrel above $46. The increase comes after last week’s report from the EIA showed surprising numbers in gasoline demand and crude inventories. After setting a record for use during the run-up to Memorial Day weekend, demand tumbled down by approximately 505,000 barrels per day. Market watchers expected to see a post-Memorial Day slump; however, the market was surprised by a strong build in crude inventories – a large increase of 3.3 million barrels. This figure re-emphasized that the market continues to see a substantial glut in crude inventories, resulting in high production rates putting downward pressure on prices per barrel.

At the end of last week, Baker Hughes, Inc. released its latest rig count report, revealing eight oil rigs had been added for the week. The U.S. now has 741 active oil rigs, an impressive number considering global concerns about the oversupply of crude in the market causing prices to trend downward. As expected, the continued growth puts more oil in the pipeline for gasoline production. With refineries still processing a lot of gasoline – measured in EIA’s recent report at over 17.5 million barrels per day – and a drop in demand, gasoline stocks around the country are continuing to grow. Price drops at the pump reflect this trend, and as the summer driving season zooms ahead, U.S. drivers may see drops continue into July and August.

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.