Gas Price Slide Continues as Major Storm Slams Northeast

Michael Green Contact Tile(WASHINGTON, January 26, 2015) The national average continues to march toward $2.00 per gallon and has fallen for a record 123 consecutive days, for a total savings of $1.31 per gallon. Today’s national average price for regular unleaded gasoline is $2.03 per gallon. Motorists are paying three cents less than one week ago, 27 cents less than one month ago and saving $1.25 per gallon in comparison to this same date last year. While the streak of daily declines in the national averages continues, the rate of decline has slowed in recent days. After dropping for an average of more than a penny a day for the first 16 days of 2015, the average drop over the past ten days has been just half a penny. This slowing decline has been largely reflective of a number of Midwestern states where prices have moved higher over the past week due to a series of refinery issues in the region.

The Northeast is bracing for a major winter storm that could dump up to three feet of snow on parts of the region. While a snowfall such as this might pressure gasoline prices immediately higher on distribution concerns, the longer term impact is expected to be downward pressure on pump prices from lower demand, as drivers stay off the roads. However, increased demand for diesel fuel, which is also used to heat homes and power generators during electricity outages, would be expected to pressure diesel prices higher during the duration of the storm’s impact.

The falling prices at the pump are a product of global oil prices tumbling to multi-year lows. While gas prices are likely to increase this spring due to seasonal demand and maintenance, barring any major increase in the global price of crude, AAA expects the national average to remain below $3 per gallon during 2015.

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Hawaii ($3.24) remains the only state posting an average price for retail gasoline above $3 per gallon, and is joined by Alaska ($2.72) as the only two states with averages above $2.50 per gallon. California ($2.45), New York ($2.43) and Washington, D.C. ($2.41) round out the nation’s top five most expensive markets. Twenty-eight states are posting averages below $2 per gallon, with the lowest prices in Missouri ($1.78), Oklahoma ($1.81), Kansas ($1.83), Texas ($1.84) and New Mexico ($1.85).

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As outlined above, the trend of falling weekly averages is beginning to ease. While 40 states and Washington, D.C. are registering savings over the past seven days, drivers in ten states are paying a bit more at the pump over the same period. Twenty-two states and Washington, D.C. are posting savings of a nickel or more, and two states Ohio (-10 cents) and  Alaska (-10 cents) are reflecting double-digit savings. The largest increases over this span are the Midwestern states of Indiana (+10 cents) and Michigan (+5 cents).

Virtually all drivers in the U.S. are continuing to experience savings at the pump compared to one month ago. The only state bucking this trend is Indiana, where the price has inched upward by fractions of a penny versus one month ago due to regional production issues.  With the exception of Kentucky (-5 cents), averages are down in every other state and Washington, D.C. by more than one dime per gallon month-over-month. Wyoming (-51 cents), Utah (-51 cents), Rhode Island (-43 cents) and Connecticut (-43 cents) are posting the largest discounts over this period, and an additional 35 states and Washington, D.C. are posting discounts of a quarter or more per gallon.

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Yearly comparisons continue to reflect the most dramatic discounts, largely due to multi-month declines in the price of retail gasoline. Alaska (-92 cents) and Hawaii (-77 cents), the nation’s most expensive retail markets, are the only two states not posting yearly discounts of at least $1 per gallon.  A total of 24 states are registering savings of $1.25 or more per gallon year-over-year, with the sharpest declines in Ohio (-$1.39), Illinois (-$1.37) and Connecticut (-$1.37).

The death of Saudi Arabia’s King Abdullah caused the global oil markets to slightly rally this past week on rumors that OPEC’s largest producer could possibly reassess its production levels and potentially decrease the current glut in global oil supply. King Abdullah’s successor, Crown Prince Salman, calmed the market by deciding to keep the current oil minister in his position and signaling no plans to change the country’s current production plans. By sustaining its current production levels, the resiliency of high-cost production countries like the U.S. and Canada will continue to be tested as the market is left to self-regulate at price levels that have not been seen in more than half a decade.

At the close of Friday’s formal trading on the NYMEX, WTI was down 72 cents, settling at $45.59 per barrel – its lowest price in six years.

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