Month: August 2014

Prices Settle At Eight-Month Low Amid Falling Demand

The price of gas continued its consistent, summer-long decline during the past week, according to the latest fuel price survey from the U.S. Energy Information Administration. The national average cost of gas dropped to an eight-month low last week, with regular unleaded settling in at $3.45 per gallon. The last time prices were this low was during the survey period of February 24, 2014, when a gallon of regular unleaded was at $3.44.

Prices have fallen significantly since the start of July, when the cost of gas was $3.70 nationally, and much higher in some survey regions, including the West Coast. The price of fuel began dropping in May, although it reversed course through most of June, greeting drivers with elevated gas prices just as the summer driving season gained momentum.

Combination Of Factors Helps Drivers Pay Less

A peculiar combination recent events has helped push the price of gasoline down, but only in the past few weeks. Until the start of July, consumers had faced a near-relentless spate of weekly price increases. However, new U.S. crude oil output, crude stock supply data and a tempered outlook regarding geopolitical risks have all taken their toll on wholesale gas and crude oil in recent weeks.

West Texas Intermediate, the domestic crude futures index, traded $105 per barrel at the end of June, only to begin a decline through July, ending the month in a dramatic selloff. Prices have continued to fall through August, and WTI is now trading under $94 per barrel.

The strange juxtaposition of influences has resulted in good news for drivers, who were supposed to enjoy gas prices in the $3.50 range through most of the summer. The E.I.A. had forecast that price point as recently as the beginning of 2014, but it quickly became apparent, by the end of February, that the price of gasoline was not going to remain reasonably low through the year. The end of February was the last time prices were as low as they are currently.

Regional Prices Differer Dramatically

The range of gas prices from one region to another is quite dramatic. Once again, the cheap spot for gas is the Gulf Coast region, where prices are down to $3.24 per gallon for regular unleaded. The West Coast, the dubious leader in the gas price survey, was presenting drivers with gas costing $3.83 per gallon. The Midwest, consistently an inconsistent region where gas prices are concerned, had prices that barely moved or were just higher during the past week. The regional average remained at $3.40 per gallon this week. Prices on the East Coast ranged from $3.54 in the New England States to $3.32 in the Lower Atlantic states.

DOWNLOAD THE WEEKLY GAS PRICE SURVEY

End Of Summer Driving Contributes To Price Drops

Lower demand for gas at the end of the summer driving season is helping drive the price of gas lower as we move deeper into August. The weekly gas price survey from the U.S. Energy Information Administration shows the price of a gallon of regular unleaded dipped just over three cents per gallon last week, pushing the average cost for retail gas to only $3.47. That is the first time since the beginning of March that the national average price has been under the $3.50 mark. The nationwide average from the March 3, 2014 survey showed fuel at $3.48 per gallon, a penny higher than this week’s average.

Prices dropped in all regions, except for the Rocky Mountain states, where prices have been holding steady or moving upward slightly. In the Midwest, which was hit with a substantial increase last week, prices fell by nearly six cents, which was largest weekly decline of all the regions surveyed. The Gulf Coast region remains the cheapest place to get gas. The price of a gallon of unleaded registered at just $3.26 in this week’s E.I.A. survey.

Diesel Fuel Prices Continuing To Trickle Lower

For truckers, the news is not quite as dramatic, in terms of weekly of the weekly price comparison. The average cost of a gallon of diesel, at the national level, is $3.84, although many truckers are paying well more than $4.00 per gallon along the West Coast, particularly in California. However, the price of diesel has been steadily declining through most of the summer, and average prices this week are at the lowest levels they have been since a week before the 2013 Thanksgiving holiday.

Crude Oil Prices Remain Below $100 Per Barrel

West Texas Intermediate crude continues to trade under $100 per barrel. Prices closed Monday at $96.41 per barrel for September delivery, on the the New York Mercantile Exchange. However, prices started out slightly higher in early trading Tuesday. Meanwhile, Brent Light Sweet crude, the overseas benchmark, was going for about $102 per barrel, but that price point is the lowest Brent has been in 14 months. Both futures indices tumbled two weeks ago amid reports that the U.S. continues to produce enough oil to offset supply issues in other areas where geopolitics have been getting in the way of production. Additionally, a fire at a U.S. refinery on July 29 also triggered a futures selloff.

However, short-term speculation is pushing WTI higher in advance of two reports this week that will detail consumer demand and the current fuel supply. With refineries operating at a slightly reduced capacity, many investment analysts are projecting WTI will rebound further, but none is predicting it will go over $100 per barrel again. Bloomberg.com quotes Michael McCarthy, the Chief Strategist at CMC Markets in Sydney, Australia, who predicts many investors will start selling off contracts if WTI moves to about $98.50 per barrel. Such a selloff would stop the September delivery contract from pushing higher.

DOWNLOAD THE WEEKLY FUEL PRICE SURVEY

Shale Supplies Reportedly Keeping Crude Price Depressed

The cost of a gallon of gasoline continued its end-of-summer slip during the past week as prices fell another penny, bringing the average U.S. gas price down to $3.51, according to the latest survey from the Energy Information Administration. Most survey regions enjoyed a decline in prices during the past week, save for the Rocky Mountain states and those living in the Midwest, where prices typically are much more volatile and frequently defy nationwide trends. The August 11 survey represents the first time since March that a survey region, the Gulf Coast, enjoyed prices below $3.30. In fact, retail gasoline averages about $3.27 per gallon for millions of people from the Florida panhandle over to the Texas coastline.

The drop in gas prices comes as the summer travel season is winding down and children in many school districts begin returning to school, but consumer demand is only one factor putting downward pressure on prices this year. Bloomberg is reporting this week the abundance of oil from shale sources in North America and elsewhere has been a significant factor in keeping crude prices from soaring. According to Bloomberg, that supply totals about 3-million barrels of oil per day, and that has put a cap on the upper limit of crude oil markets. That upper limit comes despite political instability in a number of regions that, in previous years, had always sent futures markets higher.

While crude prices did peak in June, a selloff at the beginning of this month has pushed West Texas Intermediate below the $100 mark. Brent Light Sweet crude, which is the overseas benchmark, has also sold off significantly in the past week, with some investors nearly getting routed during trades last week.

Some Drivers Still Plagued By $4.00 Gas

That is good news for American drivers, many of whom have been paying $4.00 per gallon or more for gas, typically on the West Coast. Drivers in densely populated areas of the Midwest and the East Coast have also been paying price points above $4.00, sometimes significantly above that threshold. However, the latest E.I.A. survey shows consumer gas prices are below that critical level in all regions, although price pressure in California, particularly Northern California, has kept the overall survey numbers inflated for the West Coast region. In fact, taking California out of the equation, the average price of gas on the West Coast would be only $3.78. While that number is still higher than the U.S. average, it is far lower than the $3.87 price average that results from adding the Golden State back into the price average formula.

Meanwhile, the cost of a gallon of diesel has continued to come down in recent weeks. The E.I.A. survey shows the average trucker is putting down about $3.84 for a gallon of diesel, although prices are well over $4.00 per gallon on the West Coast. The cheapest spot for diesel is, like regular gasoline, the Gulf Coast region, where prices are $3.75 per gallon.

DOWNLOAD THE WEEKLY GAS PRICE SURVEY

Cost Of Fuel Down For Fifth Consecutive Week

Gas prices continued to fall during the past week as many summer vacations began to wind down in the face of a new school year. The weekly survey from the U.S. Energy Information Administration shows the average price of a gallon of regular unleaded fell by another two cents during the past week. That brings the average cost of a gallon of gas down to $3.52, which is the lowest prices have been since the beginning of March. Many areas enjoyed an even stronger price dip, however, as summer demand for fuel wanes.

Along the Gulf Coast region, the price of gas went down by as much as a nickel per gallon, in some spots, according to spotters for TurnpikeInfo.com. The official E.I.A. survey shows the region enjoyed a price drop just over four cents per gallon, bringing the regional average to only $3.31. That price point is the lowest in the nation.

Even those areas that have significantly higher prices than the Gulf Region caught a break at the pump this week. Along the West Coast, where prices have remained well north of $4.00 for most of the year, the average price of gas is now down to $3.79 per gallon. However, when California is added into the mix, the West Coast regional average shoots up to $3.89 per gallon, according to the E.I.A. survey. California, alone, is still confronting gas prices near the $4.00 mark, with an official price point of $3.95 per gallon. In San Francisco, regular unleaded is still be purveyed at $4.00 per gallon or higher.

East Coast Drivers Paying A Wide Range Of Prices, Depending On Location

For drivers across the East Coast of the U.S., the price of fuel ranges anywhere from $3.41 along the Lower Atlantic region to a high of $3.65 in New England, at least as far as the official government numbers go. Of course, many urban drivers are finding themselves paying much more than their regional averages. Drivers traveling many interstate highways and toll roads are also paying a bit more for their gas, although that is not the case in New Jersey, where the state regulates gas prices at the service plazas.

Midwestern drivers are paying about a penny more this week than last, according to the latest government figures. Drivers in that region, which has suffered extraordinary price volatility in recent months, are paying an average $3.42 per gallon this week, up from about $3.41 last week. Ohio, where prices have been on a pendulum swing for weeks, suffered a nearly 11¢ hike in prices during the past week, nearly erasing pricing gains enjoyed just a few days ago. A gallon of gas in the Buckeye state averaged $3.49 on July 21, then $3.36 on July 28, only to return to $3.47 per gallon during the past week.

Overall, however, prices nationwide are expected to continue declining or, at the very worst, leveling off as seasonal travel winds down. Many school districts across the country are already gearing up for classes, and in some areas the first quarters start this week.

DOWNLOAD THE WEEKLY GAS PRICE SURVEY