Editor's note: The writer of the weekly gas updates, Danny Pryor, is currently traveling with an Internet and domain conference in Las Vegas. Therefore, this week's report will be greatly abbreviated. Normal reporting will resume next week.
Fuel Prices Only Slightly Higher On A National Basis, But Some Regions Enjoy Slight Price Decline
The cost of driving was pretty much the same this week as last, according to the latest fuel price survey from the U.S. Energy Information Administration. The cost of a gallon of gas held steady at $3.67 per gallon, but the price of fuel did increase several cents per gallon, particularly in Midwest, where price volatility is common.
For drivers in individual states, the weekly report conveyed good news or exceptionally bad news. In California, long beset by prices well above the $4.00 per gallon mark, this week marked another of price declines. The cost of a gas slipped downward by over 2¢ per gallon, bringing the average price of fuel in the Golden State down to about $4.16.
Halfway across the country, in Ohio, the average gas price jumped by 11¢ per gallon, all but erasing a substantial price decline that was enjoyed in the Buckeye State earlier this month. It was Ohio that largely contributed to the Midwest region’s average price increases. Region by region, the price of gas varies considerably, as it usually does.
Gulf states are currently enjoying the lowest average price of gas, while the West Coast remains the most expensive place to fill up the tank. The following breakdown represents the current weekly survey of gas prices in the United States, by region: East Coast: $3.66 New England: $3.73 Central Atlantic: $3.71 Lower Atlantic: $3.60 Gulf Coast: $3.44 Midwest: $3.65 Rocky Mountain: $3.50 West Coast: $4.00
An ongoing project to revamp the interchange of Florida’s Turnpike and Interstate 4 will result in renewed offramp closures for drivers trying to get to I-4 from Florida’s Turnpike, according to a news release from the Florida Department of Transportation. The roadway closures are similar to those instituted from April 27 through May 2.
Only drivers trying to exit the turnpike at I-4 are affected, as are truckers who wish to use the tandem parking lot that is in the middle of the interchange. The ramp closures do not affect drivers who want to get onto the Turnpike.
The ramps from Exit 259 in Orlando are closed only during the overnight hours, and the closures affect both northbound and southbound travelers exiting Florida’s Turnpike, according to the latest FDOT release. Christina Deason, spokesman for the FDOT, said, “All exiting traffic [will be] detoured to Exit 255, Consulate Drive, for SunPass customers or Exit 254, Orlando South/US 17 92/441, for cash customers.” Cash customers will be detoured along the westbound leg of the Beachline Expressway, State Road 528, in order to reach I-4, she said.
Truckers Tandem Access Affected
Truckers will be affected by the closure of the tandem lot on the nights of May 20 and 21. Deason said the lot will remain open until 1 a.m.; then it will close until 5 a.m. “During active ramp closures, tandems will not be able to exit the Turnpike to access the lot,” Deason said in the news release. “No left-in [or] left-out, to and from the staging area will be possible.”
Single trailers will be permitted on the lot during the closure hours, Deason said, but the access to the turnpike from the lot will be intermittently impacted between 1 a.m. and 5 a.m.
The national average price of a gallon of regular unleaded remained largely unchanged during the past week, according to the latest survey from the U.S. Energy Information Administration. The cost of gasoline across the contiguous 48 states remained $3.66 per gallon.
Regional gas prices in the Midwest and on the East Coast moved upward and downward between 1¢ and 3¢ per gallon, while most other regions experienced hardly a change in the cost of fuel at the retail level. Some states helped drag their regional price averages upward or downward.
For instance, Minnesotans experienced an overall 3¢ per gallon price increase, contributing to a nearly 2¢ gas price lurch across the broader Midwest region. In the Lower Atlantic states, Florida gas prices did the opposite of Minnesota’s price trend, falling by about 3¢. That helped the Lower Atlantic gas prices dip by about 2¢ per gallon.
$4.00 Gas Remains In California And Other States
The good news for drivers is that the months-long trend of increasing gas prices has taken a breather, giving Americans a much-needed break from unrelenting fuel price hikes that have threatened to push gas prices near the $4.00 per gallon mark. That dubious pricing benchmark has already experienced in places, particularly California, where the average price of a gallon of gas is $4.16, according to the E.I.A. survey.
Hawaii gas prices are also significantly higher than of $4.00 per gallon, largely due to the logistics of getting fuel to the island state. GasBuddy.com is showing at least two other states that are within striking range of the $4.00 price level, that is those that are 10¢ or less from hitting that psychological price target.
Taken at the city level, New York and Chicago are just pennies from having a $4.00 price for regular unleaded, according to GasBuddy.com, where consumers report fuel prices. However, each of those cities has already witnessed that price point this year, according to the E.I.A.
The Crude Factor Likely To Reemerge In Coming Weeks
The current reprieve in noticeable gas price hikes has been due to a number of factors, most notably the final conversion from winter blend to summer blended fuels. The other factor is, of course, the price of crude oil, which drags wholesale gas rates with it. That, in turn, affects retail prices.
Crude prices had declined somewhat during the last half of April, but investors have been trading futures upward once more. For a short time, from April 30 to May 6, the price of West Texas Intermediate, the domestic crude benchmark, had actually traded under $100 per barrel. Since May 7, however, prices have continued an uneven climb over the $100/bbl level.
WTI futures were trading around $102.62 /bbl in after-hours trading Monday night, just before 11 p.m., according to charts at CNBC.com and at Bloomberg.com. Trading charts have a lag time of about 20 minutes.
Bloomberg was reporting Monday investors are concerned about dwindling stockpiles of crude oil reaching and emerging from a key facility at Cushing, Oklahoma, where a significant portion of the nation’s crude oil transits. Supplies at Cushing have been falling since the end of January, according to E.I.A. chart data, except for a minor bump in supply at the start of April. Supply levels are now at their lowest since the first week of December 2008.
Bloomberg reports that investors are concerned the dwindling Cushing supply could bring down the current supply levels across the rest of the country, which would lead to higher costs.
“Falling Cushing stockpiles is giving a general upward push in oil, and if they continue to drop prices will be further supported,” said Will Yun, a commodities analyst at Hyundai Futures Co. in Seoul, South Korea. He spoke to Bloomberg reporters by phone Monday.
In short, that means the current price level of WTI will be sustained, at the very least, and prices could perhaps go higher.
California Drivers Get Big Break, But Ohio Gives Back A Large Part Of Last Week’s Price Drop
The average price of a gallon of unleaded gas dropped almost two cents during the past week, according the latest weekly survey from the U.S. Energy Information Administration. The price of gas settled at $3.67, which is down from 2014’s high of $3.71, a dubious achievement attained only two weeks ago.
Unlike last week, when favorable volatility pushed Midwestern gas prices down significantly, this week’s gains were lead by moderate declines in the Lower Atlantic, Gulf Coast and West Coast regions. Each district survey area enjoyed a decline of about three cents.
The drop in prices on the West Coast was due largely to a deep decline in prices in California, where the average price of gas fell by more than a nickel per gallon. That relief may be scarcely noticeable, however, for a state where the average price of gas is still about $4.17 per gallon. Drivers in Los Angeles and San Francisco are still paying more than their state’s average. For drivers across the broader West Coast region, the price of fuel remained mostly flat, although prices did nudge upward a penny in Washington State.
This week’s gas price survey provided Midwestern drivers a complete opposite of the story that played out last week. Traditionally a volatile region, gas prices in the Midwest fell almost seven cents per gallon last week, led by a breathtaking 12¢ per gallon decline in prices in Ohio. This week, however, the cost of gas rebounded by 8¢ in the Buckeye State, which helped halt what might have been a broader regional price decline. Because of Ohio and other retail pricing hot spots, the Midwest gas price average did not move, remaining at $3.60 per gallon. However, drivers across Minnesota enjoyed a drop in prices, as did many motorists in Illinois. In fact, the price of gas in Chicago fell by 10¢ per gallon for regular unleaded.
Truckers Enjoy Slight Price Breaks As Diesel Cost Declines Slowly
The mixed news for U.S. drivers did not apply so unequally to truckers. Most of the nation’s haulers are paying somewhat less for diesel fuel over the past couple of weeks, and the declines that began at the end of April have continued, albeit at a slow pace. The average price of a gallon of diesel is now about $3.95, although for many truckers along the East Coast, the price ranges anywhere from $4.04 in New England to $4.16 along the Lower Atlantic states.
In urban areas, the price can be significantly higher. For instance, in the Lower Atlantic states, the average price of a gallon of diesel is about $3.92 per gallon. However, the price of diesel was $4.09 at a service plaza on Florida’s Turnpike Sunday. In the inner city, the cost of that same gallon of diesel is as high as $4.25, far in excess of the highest regional average price, according to the EIA survey.
Crude Oil Price Declines Come To Halt Amid Concerns Of Declining Stockpiles In Oklahoma
Although the amount of crude oil being produced across North America continues to grow, the stockpiles of crude at the Cushing, Oklahoma storage facility continued to decline during the past week. Financial analysts interviewed by Bloomberg expected the stockpiles at Cushing to continue to decline, putting upward pressure on the price of West Texas Intermediate crude.
The price of WTI has come down from its recent highs, and the June contract had even been trading just under $100 per barrel last week. However, the price of crude has moved back over $100 per barrel. Bloomberg observed the cost of domestic crude is up about 2.2 percent for 2014, but compared with the trading prices only six months ago, the prices are up almost nine percent since Thanksgiving. That is in line with the overall increase since last year at this time, which is a contributor to the year-over-year gas price increases consumers have experienced.
Annual Price Changes Are Significant, And Not In A Good Way
The annual gas price differential is substantial, given that the EIA had forecast gas prices to fall through much of 2014. The EIA has revised a number of pricing and supply forecasts this year, amid a host of unexpected factors, mostly in overseas markets. Geopolitical instability and fuel supply disruptions overseas first pushed Brent Light Sweet crude significantly higher starting in the late summer of 2013, and by the end of Thanksgiving, Brent was soaring toward $110 per barrel, even while WTI was plunging. Supply problems overseas persist, and the Ukraine crisis has continued to cause instability in overseas markets.
That means what was supposed to be a cheaper summer driving season for Americans is not likely to happen this year. The current average cost of gas is about seven cents higher on a nationwide basis, but that figure is tempered only because of year over year price drops in the Midwest and Rockies, two regions that are notoriously volatile when it comes to pricing. Price declines for those areas are concentrated, at least this week, primarily in Minnesota and Colorado, respectively. For drivers in the state of 10,000 lakes, the cost of a gallon of unleaded is down a stunning 38¢ versus last year, while in Colorado, the cost of fuel is down by about 19¢.
The Colorado trend is exactly the opposite of what most drivers are experiencing, and it is part of the reason the national averages scarcely reveal the true annual gas price increase. For most drivers along the East Coast and down to the Lower Atlantic states, the cost of a gallon of gas is anywhere from 19¢ to 21¢ higher. Even in regions that have enjoyed a price break during the past couple of weeks, such as the Gulf Coast and West Coast, prices are 7¢ and 8¢ higher than last year, respectively.
First Gas Price Dips For Broad U.S. Market In Three Months, But Most Drivers Not Likely To Notice
After weeks of unrelenting price increases, the average cost of a gallon of unleaded gasoline declined about three cents during the past week, according to the latest survey from the U.S. Energy Information Administration. However, the drop in gas price will not be noticeable for most American drivers. The reason is that the national average was lead by a major regional price drop in the Midwest, where the cost of fuel dipped by as much as 13¢ in Ohio, and by an average of about 7¢ across most other states in the American heartland.
California contributed to a price drop in the Western regional states, but the decline in prices was confined primarily to Southern California, according to the EIA report. In San Francisco, gas prices remained largely unchanged. For the broader West Coast region, sans the Golden State, the price of gas actually ticked upward.
The news is almost anticlimactic for most drivers. Drivers in all but one of the survey regions are paying considerably more for gasoline going into the summer of 2014 than they were last year. In fact, Midwesterners are the only drivers paying less, but that is the result of this week’s price declines, and the region is given volatile price swings. The average U.S. gas price is about 15¢ per gallon more this year than last, and in some regions, the price is 25¢ more than it was at this time in 2013.
Prices Of Crude Oil And Gas Futures Down, But So Are Stocks Of Motor Fuel
The price of crude oil and blended gas futures has helped fuel recent price hikes for consumers, and while recent stockpiles of both crude and some refined fuels have increased in recent weeks, the actual refined motor fuel supply has been going down. That has kept consumer gas prices up, even when prices of crude oil or reformulated blend stocks have gone down.
But crude oil prices typically have wild price swings as investors bid futures contracts up or down, depending upon rumor and news. While West Texas Intermediate crude, WTI, is down from its recent highs, it is still hovering just under $100 per barrel on the New York Mercantile Exchange, NYMEX. Moreover, the WTI futures for June are still at price levels that have not been seen since the summer of 2011.
WTI’s counterpart, Brent Light Sweet Crude, also remains at high levels. The futures contract for foreign oil remained near $108 per barrel Monday evening, even though it has come down from recent highs that placed the contract over $110/bbl. Part of the reason is the continued geopolitical instability in Ukraine. The political tinderbox that is Eastern Europe flared over the weekend, with military confrontations in both east and west Ukraine.
The bloody clashes have impelled European leaders to begin to take seriously the need to diversify their energy sources, which could include some of the surplus U.S. oil and, crucially, natural gas reserves. A two-day conference of the Group of Seven ministers got underway Sunday in Rome, with the U.K. Energy Secretary, Ed Davey, telling reporters the G-7 was looking to diversify its energy supplies in the coming months and years.
“We’re determined after this crisis not to go back to business as usual,” Davey said. “Russia has tried to use energy as a weapon on several occasions now, and we’ve got to learn,” Bloomberg quoted Davey as saying. “It would be completely negligent of the G-7, the EU and our international partners not to read the message that [Vladimir] Putin is trying to tell us.”
However, many analysts believe any resources the United States could contribute, to help wean Europe from Russian energy, would take years to deliver at consistent levels. Anas F. Alhajji, chief economist at NGP Energy Capital Management LLC in Irving, Texas, told Bloomberg natural gas supplies from the U.S. likely would not start flowing until at least next year, and possibly 2016.
Still, Davey and the G-7 seemed determined there would be nothing short of a major overhaul in relations with Russia’s energy sector. “We’re determined after this crisis not to go back to business as usual,” Davey said.
How that will impact U.S. gas prices, both in the short term and the long run, remains to be seen. Natural gas is not used for fueling most U.S. cars, although many business and government fleets make use of natural gas for their cars. If supplies of natural gas tighten, due to new shipments to Europe, there is the potential for a longer-term impact on prices for other motor fuels.