Domestic And Overseas Crude Oil Destabilized
The price of gas did an about-face in most regions of the country during the past week, according to the latest weekly gas price survey from the U.S. Energy Information Administration. The E.I.A. report shows the average U.S. cost for a gallon of regular unleaded fell to $3.45 per gallon. While the national average price fell 3.4¢, the declines in some regions were barely felt, while other survey districts enjoyed larger price drops.
Regional Gas Price Shifts Vary Widely
Midwestern gas prices, usually quite volatile, had among the larger price declines during the past week, with prices slipped won just over a nickel per gallon. Those price drops were outpaced only by the West Coast region, which was hit hard just two weeks ago by substantial double-digit price increases. West Coast gasoline declined nearly 7¢ per gallon last week, but the bigger declines were confined to California and its large metropolitan areas. Remove the Golden State from the averages, and West Coast gas only went down about 4¢ per gallon.
Meanwhile, the drivers across the Rockies are paying much more for gas this week than last, according to the E.I.A., which reports the price of unleaded went up by about 6¢ per gallon in the Rocky Mountain survey region, the only region to experience a price increase. Prices across that area settled at about $2.29 per gallon, but that is well below the national average.
Gas Price Trends Extend To Trucking Industry
The Rocky Mountain region price increases affected truckers and haulers, too. The cost of diesel increased by about a penny per gallon across the survey district last week, while the broader national average price of diesel was down nearly 3¢ last week. For truckers driving across New England, the price of diesel fell just over 6¢, giving that region the biggest price decline of the week. For those regions experiencing an actual drop in diesel prices, the Lower Atlantic states had the lowest overall price decline, at just over a penny per gallon.
Crude Oil Prices Once Again In Focus
The about-face in gas prices came as crude oil began destabilizing once more at the end of last week. Prices had been lurking in a range from the high $40 per barrel to low $50 per barrel range for domestic crude, West Texas Intermediate. Brent crude, the overseas benchmark, had been trading in the high $50 per barrel to low $60 per barrel range. As of Tuesday morning, however, both futures indices had fallen substantially, with WTI now trading in the low $40 per barrel range and Brent in the low $50 per barrel range.
Broader Issues Than Supply And Demand At Play
The decline in prices can be traced to a pair of primary factors. The first is the glut of domestic crude being produced by the United States, which has been a significant factor in the pricing equation for months. The other issue is the strength of the U.S. dollar, which has been gaining ground in recent weeks due to the anticipated end of bond buying by the U.S. Federal Reserve Bank. Meanwhile, the Eurozone economies are about to experience their own brand of quantitative easing, which has resulted in a weaker Euro. Combined, the actions of the Fed and the European Central Bank have many investors fleeing to U.S. dollars, which makes U.S. oil more expensive overseas.