Gas Prices: AAA’s Fuel Gauge Report | October 29, 2012
(WASHINGTON, October 29, 2012) Today’s national average price for a gallon of regular unleaded gasoline is $3.54. This price is 13 cents less expensive than one week ago and 24 cents less expensive than one month ago, but it is nine cents more expensive than one year ago. The national average has been the highest on record each calendar day since late August; however the gap between this year’s price and the previous record has narrowed in recent weeks. Two weeks ago the national average exceeded the previous record for that day, set in 2011, by more than 30 cents. Last Monday that gap had narrowed to 21 cents. Today it’s closed to within a dime. The national average price at the pump has now fallen for 18 consecutive days.
With Hurricane Sandy bearing down, two of six Northeast refineries, totaling more than 300,000 barrels per day (bpd) of production, have announced temporary closure along with many oil terminals in the region. The four remaining refineries are expected to operate at reduced rates for the duration of the storm. The total capacity of these six refineries is an estimated 1.17-million bpd.
Unlike Hurricane Isaac earlier this year, Hurricane Sandy will impact an area that is a major consumer of gasoline rather than a major producer. Anticipated lower regional production and storm concerns have pressured wholesale gasoline prices higher today, and there have been isolated reports of individual gas stations up and down the east coast running out of gas in advance of the storm. However, the impact of demand destruction is likely to be even greater, as nearly 9,000 flights have already been canceled and 10’s of millions of motorists will stay home during the storm. Gasoline demand at this time of year is usually near 8.5-million bpd but is likely be at least one-million bpd lower for the next several days. This drop in demand has the potential to pressure pump prices lower, especially in regions like the Gulf Coast, which normally supply product to the East Coast but will not feel the direct effects of the storm.
Assuming a smooth restart to production and distribution following Hurricane Sandy, AAA expects that gas prices across the country will continue to drop leading up to Election Day and will move even lower approaching the end of the year.
Prior to the recent drop in the national average, regional pump prices fluctuated dramatically on a string of localized supply and distribution disruptions. In late July, pipeline and refinery issues in the Midwest pressured prices in those states sharply higher, including week-over-week increases of 38 cents or more in Michigan, Ohio, Illinois and Indiana. As these issues were resolved in mid-August, and Midwestern prices eased, state averages on the West Coast rose dramatically on news of a fire at the Chevron refinery in California. At the end of August and into September, prices east of the Rockies were again surging, as the impact of Hurricane Isaac impacted already low gasoline supplies approaching the seasonal shift from summer to winter-blend gasoline. To begin October, the focus shifted back west, where refinery issues again sent prices soaring, particularly in California where prices jumped a state-record 50 cents in one week.
Following a successful refinery restart and the waiver of California summer-gasoline requirements, the national average has dropped 27.5 cents in three weeks. However, this streak of declines may end as soon as tomorrow as much of the East Coast braces for “Frankenstorm” Hurricane Sandy.
Adding downward pressure to retail gas prices, but once again taking a backseat to domestic supply and distribution issues, are crude oil prices, which continue to slide on global economic weakness and a somewhat stronger U.S. dollar. At the close of today’s formal trading on the NYMEX, WTI crude oil settled at $85.54 per barrel, down 74 cents on the day.