Prices Drop Substantially With Crude Oil As Inventories Increase
An increase in domestic crude oil inventories, lower consumer demand and a slowing global economy all have contributed to a new slate of drops in crude oil prices, this as the September declines in crude are now beginning to be noticed at the pump. The average U.S. price for a gallon of regular unleaded fell a nickel last week, bringing the price of gas to $3.30, according to the latest survey from the U.S. Energy Information Administration. Last week, prices at the national level were largely unchanged, according to the survey.
Prices at the retail level have been following declines in crude oil futures. West Texas Intermediate, the domestic crude, is down more than $15 from its summer high. It was trading just under $89 per barrel on the New York Mercantile Exchange midday Tuesday. The overseas crude benchmark, Brent Light Sweet Crude, is trading under $93 per barrel, a price point more common for WTI.
Part of the reason for the decline is a rise in domestic crude inventories. A Bloomberg survey last week found stocks had increase by 2-million barrels, adding inventory amid a slowdown in consumer demand. What is more, the International Monetary Fund announced Tuesday it had reduced its global growth forecast for 2015.
Regional Volatility Adds To District And Nationwide Price Movement
This week’s gas price plunge was much larger for the Midwest Region, which is known to have greater pricing volatility than other survey districts. Prices from Wisconsin to Ohio dropped an average of 10-cents per gallon during the past week, with cities like Chicago and Cleveland enjoying average declines of 9¢ and 10¢, respectively. The Lower Atlantic states had the lowest price decline of all the regions, at just one penny per gallon.
Meanwhile, the Gulf Coast continues to enjoy the lowest prices in the nation. With the cost of gas dipping about a nickel per gallon in most spots, the average price from Texas to Alabama is about $3.11 per gallon. The West Coast remains the most expensive place to gas up, with average prices for regular unleaded gas going for about $3.61.