Monthly Archives: January 2014

Gas Prices Are Coming Down, Barely

Gas Prices Level Off For Most, Rise In Midwest

Weekly U.S. gas price trendThe price of gasoline across the U.S. barely moved from it’s $3.30 national average during the past week, although some people across the East Coast and New England are paying noticeably less for fuel, according to the latest survey from the U.S. Energy Information Administration. The EIA report shows the average price of a gallon of unleaded, including all taxes, remained at about $3.30 this week, while the cost of driving, as measured by the price at the pump, did come down almost 3¢ per gallon for New Enganders and about a penny per gallon for most of the rest of the East Coast. West Coast drivers also enjoyed a slight reprieve, but the volatile Midwest markets had a 2¢ per gallon increase in the price of gas.

Shipping Gets More Expensive As Truckers Pay More

Trucks on a high level bridge 02The price of diesel took an different path during the past week, primarily because refineries are being forced to devote additional resources to meet the winter demand for propane and natural gas. The diversion contributed to a mid-winter price spike in diesel, with the cost of a gallon of shooting up over 3¢ per gallon during the past week, with the national average now at $3.90 per gallon. That figure is fairly deceptive, however, with truckers in many states paying as much as $4.17 per gallon, on average, for diesel.

While the Farmer’s Almanac predicted the 2014 Winter would be particularly brutal, the spate of winter storms crossing through the Great Lakes states and the Northeast seems to have caught fuel suppliers off guard, nonetheless. The current price of a fillup for a tractor-trailer, with two 150-gallon tanks, is now as high as $1251.00 in some areas.

Long-term Trend Still Shows Prices Falling

Despite the December and early January upward run in costs, the prices of gas and diesel are still lower now that at the start of 2013. The U.S. average for a gallon of unleaded was about $3.36 at this time last year, while a gallon of diesel was about $3.93. While prices are projected to continue falling through 2014, the start of the year has been  more costly for drivers. Prices are, on average, 21¢ per gallon higher than they were just over two months ago. For  truckers, the news isn’t quite as bad, with diesel up about 8¢ per gallon over the past two months.

Crude Oil Prices Fluctuating, But Not As Wildly As November and December

Crude oil prices have stabilized from their wild swings over the previous two months, although some instability lingers. The price of the benchmark Brent Light Sweet Crude has come off its December highs, but the index continues to trade in a narrow range between $106 and $109 per barrel. Prices have stabilized primarily because of reduced geopolitical tensions in Libya and the Eastern Mediterranean. The Libyan situation, in particular, has helped cap Brent prices, with supplies flowing at higher levels, although still not at their projected capacity.

Meanwhile, the cost of West Texas Intermediate continues to be quite volatile. WTI has been as low as $91.78, on January 13, and as high as  $97.35, where it closed only ten days later. WTI is currently trading in the lower $90’s, and prices on early Wednesday were hovering around $94 per barrel.

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Gas Prices Do About Face And Decline As Diesel Begins To Cost More

Drivers Enjoy Break In Price Increases

2014-01-20-trendFor the first time in several weeks, the price of gasoline finally began to decline, but the news for truckers was mixed during the past week, according to the latest survey from the U.S. Energy Information Administration. The average price of a gallon of unleaded fuel slipped downward just over 3¢ per gallon during the past week, according to the survey report, which was delayed this week for the Martin Luther King, Jr. Holiday. The average price of gas fell to $3.30 per gallon, and while the nationwide average cost of diesel fell about a penny, the cost of diesel went up between 1¢ and 2¢ per gallon across the East Coast, New England and the Central and Lower Atlantic regions.

 Unleaded Costing Less Across All Regions

The price of unleaded dipped in every region of the U.S., although the declines were barely noticeable for drivers along the Gulf Coast and the West Coast of the U.S. For California, however, prices dipped as much as a nickel per gallon. The biggest price decline came in the  Midwest region, which is known for wild price swings from one week to the next. Drivers across Michigan, Indiana, Iowa and Illinois felt prices drop just over a nickel per gallon, although the arrival of new winter storms this week has brought new problems at the pump, as refineries shift gears and try to meet an almost extreme demand for propane, the preferred heating fuel for many households in the Midwest.

Across the East Coast, New England and Atlantic States, the price of a fill-up dropped as much as 4¢ per gallon, although the Lower Atlantic states, barely saw prices move, in line with the neighboring Gulf Coast region.

Increased Demand Forecast Pushes WTI Crude Higher

While the forecast for gas prices is a long-term trend toward lower costs, the price of U.S. crude oil has been on a wild swing during the past two months, starting with dramatic price declines ahead of Thanksgiving 2013 that were completely reversed by the middle of December. The volatile West Texas Intermediate futures closed at over $95 per barrel Tuesday as the International Energy Agency – not to be confused with the U.S. Energy Information Administration – announced global crude oil demand would increase by 1.3-million barrels per day this year, about 50,000 barrels per day more than originally expected.

The increase in global demand has put upward price pressure on WTI,  which is also under trading pressure as February contracts begin to expire. Traders are buying additional contracts to cover their positions ahead of those contract expirations, according to a financial report on CNBC.com.

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Gas Prices Officially Remain Flat, But Price Declines Greeting Many Drivers

2014 Starts Out More Expensive Than 2013

weekly gas prices

Weekly gas price trend for the U.S.

The price of a gallon of gasoline remained fairly flat during the past, on a nationwide level, according to the latest weekly survey from the U.S. Energy Information Administration. The EIA report shows the average price of a gallon of unleaded is just under $3.33 per gallon, although as a practical measure, the price of fuel stayed pretty much the same from one week to the next. However, regional price shifts tell a radically different story, with some areas paying several cents more per gallon and others paying a few cents less.

Midwest and Rockies Endure Price Increases, Particularly Year Over Year

The cost of driving did get a little more expensive for people living in the Midwest and Rocky Mountain states, with the price of fuel going up about 3¢ per gallon in both regions, underscoring the pricing volatility that can be experienced from one region to the next and on a nearly daily basis. The Midwest, for instance, has suffered wild pricing swings over the past month that have made budgeting for gasoline difficult for most drivers. Stations are charging, on average, about $3.25 per gallon across the Midwest, which is about where prices were two weeks ago. After a one-week respite, Midwesterners are paying almost as much as they were at the end of December, when sudden week-over-week inflation brought the price of gas in the heartland to fresh highs for 2013.

Indeed, with the recent spate of price swings in the Midwest, drivers across the region are paying about 10¢ per gallon more than at this time last year. However, that number is not nearly as severe as those living in the Rocky Mountain states. The average price of gas across states like Idaho, Montana and Colorado may be less than in the Midwest, at $3.15 per gallon, but that figure is over 28¢ per gallon higher than January 2013. While most of the rest of the nation is paying about 2¢ to 3¢ more per gallon this year, the Midwest and Rockies have been hit hardest by the year-over-year price increases.

EIA Predicts Strong Crude Supply Will Bring Prices Down

The Energy Information Adminstration continues to forecast lower prices through 2014, however, despite the rocky start to the year. Typically, gas prices do begin a calendar year slightly higher because refineries are holding back on new inventories to avoid year-end taxes they would have to pay on stored supplies. Prices generally fall through January and into the start of February. But the EIA is predicting prices will continue declinig through 2014 and, potentially, 2015, with a strong domestic crude oil supply bolstering import supplies.

The weekly petroleum summary from the government forecasts domestic crude oil production to reach levels that have not been seen since the Nixon Administration. “EIA projects crude oil production to average 8.5 million bbl/d in 2014 and 9.3 million bbl/d in 2015, which would be the highest annual rate of crude oil production since 1972,” the agency has reported. “Production from tight oil formations in Texas, North Dakota, and a handful of other states has driven total crude oil production growth for the past four years. Development activity in these key onshore basins and increasing productivity as companies learn how to apply hydraulic fracturing techniques more effectively and efficiently are central to [the] Short-term Energy Outlook forecast.”

EIA Crude Oil Production Chart

U.S. domestic oil production from 1960 onward. The EIA is predicting domestic prodution will rise to levels not seen since the early 1970’s.

Crude Futures Mixed Overseas And Domestically

The EIA report has had little impact on crude futures markets, which have responded in recent months to political unrest in Libya and Syria, driving the cost of Brent Light Sweet Crude higher. Potential resolutions to the Iranian nuclear refinement programs has kept pricing pressure at bay, however, with the potential for new supplies fairly good, if negotiations go well. New talks between world powers and Tehran are expected to continue in Geneva next month.

The political unrest that has kept Libya’s crude production low, at about 300,000 barrels per day, has finally begun to ease. That has helped production double to about 600,000 bbl/d in the past couple weeks, but that level is about half the production that was being output in July 2013.

Prices of West Texas Intermediate augur the best potential for lower gas prices in the immediate future, at least for North America. WTI had spiked in December, closing over $100 per barrel, but prices for February delivery have fallen considerably in the past week, closing Monday at $91.54 per barrel.

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Gas Prices Start 2014 With An Edge Higher

National Average Remains Nearly The Same, But Regional Prices Increase

weekly gas prices

Weekly gas price trend for the U.S.

The price of a gallon of gas remained flat across many regions of the United States during the past week, according to the latest survey from the U.S. Energy Information Administration. However, the national average, which remains at about $3.33 per gallon, hardly tells the story for most areas, including the West Coast and New England, where prices edged higher by about two cents. For the broader East Coast and the Lower Atlantic states, the price of gasoline nudged higher by more than 3¢ per gallon. It was the Midwest region’s 4¢ per gallon price decline that tempered the increase in the national averages. The result is what appears to be a flat week-over-week price point, even though most Americans are paying higher gas prices.

Midwest Prices Ease After Major Hike In Recent Weeks

The cost of fuel in the Midwest dipped by an average of 4¢ per gallon during the past week, helping ameliorate a nasty series of price increases, particularly last week, which had troubled the region during the holidays. The price of fuel across the nation’s heartland was about $3.07 in the middle of December, but it ended 2013 with average prices having soared to $3.26, and higher in some areas across the midwest. The current average has slipped downward to $3.22.

Diesel Prices Nudge Higher

The price of diesel also remained nearly flat across the nation during the past week, although the average price per gallon did go up, from $3.90 to $3.91. However, extreme pricing can still be found in the New England states and California, where the average price in both regions is currently $4.12.  The cheapest price for diesel is still found across the Gulf Coast states.

2014 Gas More Expensive Than 2013, But Diesel Is Mostly Cheaper

The price of gas, while declining for many months at the end of 2013, ended the year higher. Consumer gas prices for many drivers are starting 2014 higher than they were last year, and this is particularly true across the Rocky Mountain region, where the price of regular unleaded gas is 19¢ per gallon higher than at this time one year ago. For truckers in the Rockies, the price of diesel is 21¢ higher, per gallon.

The Rocky Mountain price averages are extreme examples, however, as most Americans, while paying higher prices for gas, are only paying a few cents more per gallon as 2014 starts, versus 2013. Drivers across the Gulf Coast and the Lower Atlantic states are actually paying less, compared with last year.

Diesel drivers are also paying less; in fact, diesel prices across the East Coast and Lower Atlantic states are upwards of 6¢ per gallon less; however, truckers and other diesel car drivers in California are paying as much as 7¢ per gallon more, demonstrating a broad disparity in the distribution of gas prices, from state to state and region to region.

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