(September 23, 2019) Last week was the first time since early June that the national gas price average jumped more than a nickel in under a few days. On the week, it’s a dime more expensive at $2.66 with half of states seeing prices increase by 10 cents or more. However, even with the significant increase, the national average is still cheaper compared to last month (-6 cents) and last year (-19 cents).
Spurred by the Saudi Arabian oil facilities attacks the weekend prior, crude oil (West Texas Intermediate – WTI) increased as much as $10/bbl at its highest point early last week to nearly $64/bbl. Gasoline stations reacted just as swiftly as the market, raising local retail prices by as much as a quarter, which pushed the national average up six cents overnight last Tuesday. However, by the end of last week, crude was down to $58/bbl and gas prices started to stabilize as reports surfaced that Saudi facilities should be fully operational by end of September.
“At $2.66, the national average is a dime more expensive that last week. The good news is we are seeing downward movement with crude oil prices and stabilization at gas pumps, but Americans can expect some fluctuation through the end of the month,” said Jeanette Casselano, AAA spokesperson. “Should Saudi’s crude production be back to full capacity shortly, the price spikes are likely to be temporary.”
In its latest report, the Energy Information Administration (EIA) measured U.S. demand at 8.9 million b/d, which is a substantial 900,000 b/d drop from the previous week and a low reading not seen since February. The decrease in demand amid the spike in crude oil prices could help to keep gas price fluctuations more moderate through the end of the month.
- The nation’s top 10 least expensive markets are: Mississippi ($2.32), Louisiana ($2.32), Arkansas ($2.33), Alabama ($2.34), South Carolina ($2.35), Oklahoma ($2.37), Virginia ($2.37), Texas ($2.38), Tennessee ($2.39) and Missouri ($2.40).
- The nation’s top 10 largest weekly increases are: Kentucky (+19 cents), Michigan (+18 cents), Georgia (+17 cents), Minnesota (+16 cents), Maryland (+14 cents), Iowa (+14 cents), Delaware (+14 cents), Mississippi (+14 cents), New Mexico (+13 cents) and South Carolina (+13 cents).
Great Lakes and Central States
Pump prices in the Great Lakes and Central states saw the highest volatility of any region following the drone attacks on Saudi Arabian oil facilities. Motorists in some states are paying nearly 20 cents more to fill-up as compared to last Monday. Kentucky (+19 cents), Michigan (+18 cents), Minnesota (+16 cents) and Iowa (+14 cents) saw the largest weekly increase in the region and land among the top 10 states in the country with the biggest jumps in pump prices. Most states in the region are paying more than they were a month ago, with the exception of South Dakota (-2 cents), Wisconsin (-1 cent) and Michigan (no change).
State averages range between $2.82 – $2.40, with three states touting an average at $2.70 or above: Illinois ($2.82), Michigan ($2.73) and Ohio ($2.70).
Gasoline stocks drew by 539 million bbl for the week ending Sept. 13, in EIA’s latest report. That drops total stocks down by 52.5 million bbl, which is among the highest decreases seen in the region since April. Down 4% to 96%, regional refinery production could slow in coming weeks as refineries plan for fall maintenance. A drop in stocks amid more expensive crude oil prices would likely mean an increase in pump prices for motorists in the region.
South and Southeast
High volatility was also seen among the South and Southeast states on the week. Georgia (+17 cents), New Mexico (+13 cents), Mississippi (+14 cents), South Carolina (+13 cents), Texas (+12 cents), Alabama (+12 cents) and Louisiana (+12 cents) all saw a dime or more increase to the state average.
Still, the majority of gas price averages in the region are $2.45 or cheaper, with Mississippi ($2.32), Louisiana ($2.32), Arkansas ($2.33), Alabama ($2.34), South Carolina ($2.35) and Oklahoma ($2.37) carrying the cheapest in the region and the country at the start of the workweek.
At the end of last week, Tropical Storm/Depression Imelda dumped as much as 45 inches of rain in Texas, but industry reports show refineries are operational. The impact of the storm – including flooding – is not expected to have an effect on gas prices.
With a 2.6 million bbl build, total gasoline stocks for the South and Southeast region sit at 78.6 million bbl in EIA’s latest report. Stocks could see a decrease next week as a result of regional refinery utilization trending down slightly to 92%. Motorists can expect to see volatility at the pump through the end of the month, especially due to the previous week’s spike in crude oil prices.
Mid-Atlantic and Northeast
Four Mid-Atlantic and Northeast states saw gas price averages jump more than a dime on the week: Maryland (+14 cents), Delaware (+14 cents), Tennessee (+12 cents) and North Carolina (+11 cents). However the majority of states in the region saw a minimal impact – with pump jumps of only a few pennies. Vermont (+1 cent) and Connecticut (+2 cents) saw the smallest increases followed by these states which all saw a three cent increase: New Hampshire, Rhode Island, Maine, Massachusetts and New York. Part of the reason such a large number of states saw tempered increases is due to the switchover to winter-blend gasoline last week. This blend is cheaper to produce and sell (compared to summer-blend). Therefore the region was set to experience a decrease at the pump already, which lessened the jumps stemming from the market (crude oil) increases.
Gasoline stocks drew down significantly for a second week, this time by 1.2 million bbl. Total stocks now measure 62.3 million bbl, which is nearly a 3.5 million bbl deficit compared to this time last year. Gas prices in the region may fluctuate in the week ahead as the market continues to adjust to crude oil prices.
Colorado (+10 cents) saw the largest impact in the region at the pump on the week in response to crude oil spikes in the market. Wyoming (+4 cents) saw the second largest increase followed Utah (+3 cents) and a minimal impacts in Montana (+1 cent). Idaho was the only state in the country to see a decrease, albeit a penny, on the week. In the region, state averages range from $2.70 – $2.79.
In addition, Utah (-8 cents), Idaho (-7 cents), Montana (-3 cents) and Wyoming (-2 cents) are among a minority of states whose gas price average is cheaper compared to last month.
With a little more than a 100,000 bbl build, EIA reports regional gasoline stocks to be above 7.5 million bbl. In fact, total stocks sit at a 1.1 million bbl surplus compared to levels mid-September 2018. Despite the healthy levels, Colorado’s gas prices are likely to see some fluctuation while the other states in the region are poised to see some volatility in the short-term.
Motorists in the West Coast region are paying the highest pump prices in the nation, with all states in the region landing on the top 10 most expensive list today. California ($3.74) and Hawaii ($3.66) are the most expensive markets in the country. Washington ($3.20), Nevada ($3.15), Oregon ($3.07), Alaska ($2.97) and Arizona ($2.89) follow. All state averages in the region have increased on the week. California (+11 cents) saw the largest increase, followed by Arizona (+6 cents) and Nevada (+5 cents).
The EIA’s recent report for the week ending on September 13, showed that total West Coast motor gasoline stocks decreased by 133,000 bbl to 28.6 million bbl. This level is approximately 340,000 bbl lower than in mid-September 2018. Amid rising oil costs, shrinking stocks put additional pressure on prices as they spiked last week. Motorists in the region will likely see prices continue to stay high this week as the market continues to adjust to higher crude prices.
Oil market dynamics
At the close of Friday’s formal trading session on the NYMEX, WTI decreased by four cents to settle at $58.09. Oil prices increased sharply last week, following news of attacks on two crude oil facilities in Saudi Arabia on September 14. On Monday, September 16, the first full day of trading after the attack, WTI crude oil prices experienced the largest single day price increase since August 21, 2008 and June 29, 2012, respectively, according to EIA. On Tuesday, Saudi Aramco reported that it was producing 2 million b/d and that its entire output capacity will be fully restored by the end of September. Additionally, Saudi Aramco stated that crude oil exports to customers would continue by drawing on existing inventories and offering additional crude oil production from other fields. Tanker loading estimates from third-party data sources indicate that loadings at two Saudi Arabian export facilities were restored to the pre-attack levels – based on analysis by EIA. These efforts have helped crude prices to stabilize, and they are expected to continue stabilizing this week.
In related news last week, EIA reported that total domestic crude inventories increased by 1.1 million bbl last week. They currently sit at 417.1 million bbl, which is 23 million bbl higher than where they were last year at this time.
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.