Prices Plunge Another Seven Cents In One Week
Even as freak snowstorms buffet many parts of the nation, the supply of gas, coupled with the multi-year low prices of crude oil futures, have continued to push the retail price of gas to fresh lows for 2014. The nation’s average price of gas fell over 7¢ per gallon during the past week to settle at $2.82, according to the latest weekly price survey from the U.S. Energy Information Administration. In the Gulf Coast region, some drivers are enjoying what might be called “super low” gas prices, because premium gas is below $3.00, at some stations, a new threshold not commonly seen until the current spate of price declines. Along the broader Gulf Region, the average price of regular unleaded is the lowest in the nation at $2.59.
The week-on-week declines in fuel prices extended to diesel, which fell over 3¢ per gallon in most places. Prices in the Midwest and along the West Coast, a substantial survey region, fell by more than 4¢ per gallon. The U.S. average diesel price is now $3.62, with the Lower Atlantic states enjoying the lowest cost at an average $2.44 for the region. Truckers moving across the Rocky Mountain states and the broader West Coast region will pay the highest per-gallon prices for diesel at $3.74 and $3.72 per gallon, respectively.
2014 Crude Trends Differ From 2013
The price of fuel has been going down steadily since the end of June, when the summer peak in prices brought regular unleaded gas to $3.70 across the nation. Crude prices began to decline near the end of June, both on the domestic index, West Texas Intermediate, and the overseas benchmark, Brent Light Sweet Crude.
Interestingly, the price of diesel has been going down steadily since March 10, save for a two-week bump in prices at the end of April and another two-week upward lurch at the end of June. In each case, the price of unleaded gas also spiked, reaching spring time and summer peaks, respectively. For 2013, the prices of diesel and regular unleaded gas followed each other in a close trend line, which seems to have broken just ahead of spring in 2014.
Year On Year, Gas Is Significantly Cheaper
Regardless of the crude oil trends, both diesel and regular gas are significantly cheaper than at this time last year. On average, regular unleaded gas is about 47¢ less than at this time last year, when gas prices were reaching their seasonal low. Prices across the Lower Atlantic states are nearly 60¢ per gallon less than last year.
The year-on-year spread is not as pronounced for diesel, which is about 22¢ per gallon cheaper this year than at this time in 2013. However, prices in some regions, like the Rocky Mountain and Midwestern states, are only 10¢ and 8¢ per gallon cheaper. However, prices across those regions are known to fluctuate wildly. Just three weeks ago, the YoY comparison put prices in the Rocky Mountain states at 14¢ per gallon cheaper than last year. For the Midwest, prices were actually higher year on year.
Gas Prices Likely To Remain Low For Near Term
That kind of volatility makes short-term price forecasting for those regions difficult. And forecasting crude oil prices can be equally troublesome, even in the face of ever-rising U.S. production levels. Some analysts have believe the price of crude will remain in a tight range in the mid to upper $70s of dollars per barrel. However, IG’s Chris Weston told Bloomberg News Monday he believes the price of crude has likely bottomed out or may be close, largely due to political and industrial movements in Libya and a potential move by Iran and Saudi Arabia to cut production in the coming weeks.
Year On Year Gas Savings Could Near Or Exceed $80-million
In the meantime, the price of gas remains poised to provide holiday drivers with bonus this Thanksgiving. The American Automobile Association is predicting about 41.3-million U.S. drivers will journey 50 miles or more from home this week. Applying the average year-on-year U.S. gas price savings, that means the American drivers will save, in the aggregate, about $78-million in fuel costs.
That figure is predicated on the following assumptions: A car getting an average 25 miles per gallon, with at least a 100-mile round trip that would consume four gallons. Extending the formula to include AAA’s holiday traffic projection, that translates to about a combined 185-million gallons of gas among 41.3-million drivers, multiplied by the current U.S. price average of $2.82 per gallon, versus the $3.29 price point at Thanksgiving last year.