Gas Prices Settle Just Under $2.30 In Latest Weekly Survey

Year-end Gas Prices Down 30% From Start Of 2014

Gas price trends for week of December 29, 2014The average cost of a gallon of gas dipped another dime during the past week to settle at $2.30 per gallon, according to the latest weekly survey from the U.S. Energy Information Administration. The cost of gas is now over a dollar less than it was when the year started, and some drivers are paying as much as $1.18 less for gas than they were when 2014 began.

Region by region, the most expensive place to get gas remains the West Coast, where the average driver is paying about $2.62 per gallon, but even that price is 91¢ lower than at the beginning of the year.

The cost of diesel also dropped a fair amount during the past week, with the average trucker paying about 7¢ per gallon less than last week, and the average hauler paying about 69¢ less than a year ago. Overall, the U.S. average diesel price is now just $3.21 per gallon.

Because of refinery and supply issues, the most expensive place to get diesel is currently the New England states, where the average price is $3.37 per gallon. California comes in a close second, with the average diesel price ticking in at $3.36 in the Golden State.

Crude Oil Hits Fresh Lows On The Year

Meanwhile, domestic crude oil prices hit a fresh low on the year Monday, closing at $53.76. West Texas Intermediate is well on track to have shed more than 20% of its contract price during December, although there remain two trading days in 2014. Brent Light Sweet Crude, the overseas benchmark, is also coming off lows for the year, having closed below $58 on Monday. At present, both futures indices were up in early Tuesday trading. The crude contracts are a strong indicator of where gasoline prices are heading in the next several weeks.

Crude prices are down nearly 50% for the year, and as the price of crude has fallen, particularly since the middle of the summer, retail prices have followed. The corollary has been very close, too. At its peak price in 2014, regular unleaded topped out at $3.71 in late April, and again at $3.70 in June. WTI hit its peak in June, as well, before beginning a slow decline that accelerated as the holidays began.

Domestic Oil Production Still Expanding, But Likely To Slow

The likelihood of crude continuing to fall is beginning to wane, however, as oil riggers in the United States have begun shutting drilling operations for the time being. Bloomberg news cited a report from Baker Hughes this morning that U.S. oil drillers idled more rigs last week than at any time since 2012, primarily because the cost of driller is not justified when prices fall below a specific floor.

U.S. oil refinery
U.S. oil production has contributed to a significant slide in crude oil futures, but some U.S. companies are temporarily idling rigs, which could slow production growth and potentially halt the decline in crude prices.

Moreover, Bloomberg News is reporting today it expects the U.S. crude supply to remain at 387.2 million barrels on the week, which the media group reports as the highest stockpile of crude since 1982. Reporters cited U.S. statistical data and their own surveys when publishing their data. Bloomberg also reported this morning that domestic oil production is at its highest levels since tracking began in 1983.


Gas Prices Fall 15¢ In Single Week

Prices Below $2.00 Per Gallon In Some Areas

Gas price trend for week of December 22, 2014The price of gas continued its precipitous decline during the past week, falling an average of 15¢ to settle at $2.40 per gallon. The figures are detailed in the weekly gas price survey from the Energy Information Administration, a branch of the Department of Energy. In some regions, the price of gas is so low it is closing in on the $2.00 per gallon level, and for a few lucky drivers across the Gulf Coast, the price is actually below that threshold for the first time in several years.

This week’s price decline is so dramatic, it underscores the close bond between the price of consumer gas and the futures markets. Crude oil futures are down by half since the middle of the summer, when gas prices were averaging about $3.70 per gallon, nationwide. Since then, domestic crude oil, West Texas Intermediate, has fallen from a high near $105 per barrel down to close at $56.22 on Tuesday.

WTI has been trading between $50 and $60 per barrel for the past two weeks, ever since it close under $60 on December 11. Brent Light Sweet Crude, the overseas benchmark, is also down substantially in the past six months, from $111 per barrel at the end of June to $60.68 on Tuesday. Brent has closed under $60 twice in the past ten days.

As Goes Crude, So Goes Retail Gasoline

Gas prices through the year and at the end of 2014
At left: The price of gasoline has fallen so dramatically, the cost is below $2.00 per gallon in some areas of the United States, including at this station in Round Rock, Texas, near the Dell Campus, which is adjacent to the Texas 45 toll road. Meanwhile, the accompanying price chart from the E.I.A. displays the dramatic rise and fall of gas prices during 2014. Photo: Eric Scallion. Chart and data: E.I.A.

The question of how low prices will go is a point of contention among energy analysts, but the general mood is that the current glut in oil will likely last well into 2015. A report on Bloomberg news this morning details the trio of issues that have converged to impel the biggest yearly drop in oil prices since the Great Recession began in 2008. Those factors are high output by the United States, where the shale boom has help production rise to its highest levels in 30 years, continued high output by OPEC nations, and a slowing global economy that will continue to reduce worldwide demand in the coming months.

While the U.S. economy is growing at a fairly good pace – the Commerce Department reported gross domestic product rose at an annualized 5 percent rate during the third quarter – market watchers from Europe to the U.S. agree the rise in American demand for gas is not enough to offset the lower demand overseas.

While much of what happens in energy markets may seem esoteric to the average consumer, the corollary between crude and retail gasoline is unmistakable. Particularly in the face of high domestic production, drivers are not likely to see gasoline prices reversing course any time soon. Brent and WTI futures for February delivery are not any higher than the January contracts, which are influencing the price of gasoline today.

Diesel Prices Also Down, More Consistent From Region To Region

That price of gas has fallen $1.30 in the past six months, but the price of diesel has also come down substantially in the past six months, although the declines have not been quite as dramatic as retail gas. Diesel prices, on average, fell 14¢ per gallon last week to settle at $3.28 per gallon. As with regular automotive fuels, diesel prices vary region by region, but the disparity from one section of the nation to the next is not as dramatic as with unleaded gas.

For instance, the lowest prices for gasoline are found along the Gulf Coast, where the average consumer is paying about $2.18 per gallon. The highest average price, by survey region, is the West Coast, where prices are still about $2.70 per gallon. That is a range of 52¢. On the other hand, diesel’s highest prices are presently found on the East Coast, where the cost is $3.43 per gallon in the New England states, higher than California, where the price averages $3.41. The lowest cost is across the Gulf Coast, where prices for diesel are about $3.18. That puts the range for diesel at only 33¢; the fact diesel is more costly than unleaded gas also means that, mathematically, the cost of the fuel is more consistent from region to region.


Gas Prices Crumble Amid Supply Glut And OPEC Discord

EDITOR’S NOTE: Our weekly report was not published for the week of December 8, 2014. However, we have the weekly E.I.A. price survey for the week available, and it may be viewed or downloaded.

Domestic Crude Down Almost 50% In Six Months

Gas price trends for week of December 15, 2014The price of a gallon of gas has plunged in the past two weeks to record lows for the decade, and prices are poised to go even lower. Commodities experts agree consumers are benefiting from a glut of domestic shale oil and a recent decision by OPEC members not to alter production levels overseas. As a result the average U.S. consumer is paying almost a quarter per gallon less for gas than just two weeks ago, according to the latest survey from the U.S. Energy Information Administration. The E.I.A. report shows the average U.S. gas price is now $2.55 per gallon, down 13¢ in the past week, which follows a 10¢ decline the week earlier.

Gas price trends for the week of December 8, 2014
Top: The price of gas declined a stunning 13¢ per gallon last week. Above: The current price decline comes on the heels of a 10¢ decline the during the previous week.

The price of gas has declined so substantially that it is now almost 70¢ less than at this time last year, and prices, nationally, are about $1.15 less than just six months ago. That translates to a savings of $17.25 for every 15-gallon fill-up, and it is not just the general public that is benefitting.

Diesel Prices Declining At Faster Pace

After slow-paced price declines for most of the summer and autumn, truckers and fleet operators are realizing a substantial benefit from the lower crude oil prices, which has lead to lower costs for diesel. The average price of a gallon of diesel is down 45¢, year on year, and now averages $3.42 per gallon nationwide. Even in California, where prices remain higher than most states, the cost of diesel is down over 50¢ on the year to $3.55 per gallon.
That kind of a price decline means a substantial savings for the operation of a single tractor-trailer rig, to say nothing of the savings for small to large fleets of trucks. Given the average rig will hold about 250 gallons of diesel, a savings of $125 for every stop quickly aggregates into the thousands-of-dollars range.

Crude Continues Trading In Low $50’s Range

Domestic crude oil, West Texas Intermediate, has been trading in the lower $50 range for the last several days, although prices rebounded somewhat during early Tuesday trading. However, Brent Light Sweet crude, which is the overseas benchmark, was down early Tuesday after OPEC ministers again stated they would not cap production to control pricing.

Meanwhile, the reduced oil prices have touched off global instability in some regions threatened by the lower pricing, particularly unstable African nations, including Libya and Nigeria. In South America, the Venezuelan economy, already feeling a pinch due to civil unrest this year, is poised to suffer setbacks due to a sharp decline in revenues from oil exports.


Gas Prices Continue To Tumble As Crude Futures Sink Further

Gas price trend for week of December 1, 2014Some Analysts Predicting Oil At $50 Per Barrel Due To Shale Boom

The price of regular unleaded gas continued its months-long tumble to settle at an average $2.78 per gallon, according to the latest weekly price survey from the U.S. Energy Information Administration. The E.I.A. report also shows diesel prices continued their price drops during the past week, with the nationwide average coming in at $3.60 per gallon. On average, American drivers are paying about 93¢ per gallon less for gas than they were just six months ago, which translates to $13.95 of savings for every fill up of a 15-gallon fuel tank.

Regional Prices Continue Falling At Different Rates

Gas prices around the country still vary widely by region, however, with the West Coast continuing to tally the highest prices in the country. Even so, for drivers from California to Washington State, the average price of $3.02 per gallon is welcome relief after a summer in which prices were regularly well above the $4.00 mark. The lowest prices in the country continue to be found in the Gulf Coast states, where the average price is now about $2.53 per gallon, but some stations near Austin had gas for less than $2.50.

Crude Oil Leading The Way To Lower Prices

Meanwhile, the price of fuel is expected to keep falling as it follows the trends in crude oil futures. Domestic crude, West Texas Intermediate, is now less than $70 per barrel to its lowest point in over five years. As WTI goes, so goes Brent Light Sweet Crude, which is also trading just above $70 these days. The reason is, of course, the U.S. shale boom, which has produced a much larger crude oil surplus than originally expected by both drillers and refineries. Michael Yoshikami, founder of Destination Wealth Management, told CNBC Tuesday it was not unrealistic to think domestic crude could fall as low as $50 per barrel. Another oil market analyst, Olivier Jakob of Petromatrix in Zurich, said Brent could still trade in the $60-$70 range, like WTI does currently, particularly if the U.S. supply remains high and overseas producers continue their high level of output.