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Gas Prices Officially Remain Flat, But Price Declines Greeting Many Drivers

2014 Starts Out More Expensive Than 2013

weekly gas prices

Weekly gas price trend for the U.S.

The price of a gallon of gasoline remained fairly flat during the past, on a nationwide level, according to the latest weekly survey from the U.S. Energy Information Administration. The EIA report shows the average price of a gallon of unleaded is just under $3.33 per gallon, although as a practical measure, the price of fuel stayed pretty much the same from one week to the next. However, regional price shifts tell a radically different story, with some areas paying several cents more per gallon and others paying a few cents less.

Midwest and Rockies Endure Price Increases, Particularly Year Over Year

The cost of driving did get a little more expensive for people living in the Midwest and Rocky Mountain states, with the price of fuel going up about 3¢ per gallon in both regions, underscoring the pricing volatility that can be experienced from one region to the next and on a nearly daily basis. The Midwest, for instance, has suffered wild pricing swings over the past month that have made budgeting for gasoline difficult for most drivers. Stations are charging, on average, about $3.25 per gallon across the Midwest, which is about where prices were two weeks ago. After a one-week respite, Midwesterners are paying almost as much as they were at the end of December, when sudden week-over-week inflation brought the price of gas in the heartland to fresh highs for 2013.

Indeed, with the recent spate of price swings in the Midwest, drivers across the region are paying about 10¢ per gallon more than at this time last year. However, that number is not nearly as severe as those living in the Rocky Mountain states. The average price of gas across states like Idaho, Montana and Colorado may be less than in the Midwest, at $3.15 per gallon, but that figure is over 28¢ per gallon higher than January 2013. While most of the rest of the nation is paying about 2¢ to 3¢ more per gallon this year, the Midwest and Rockies have been hit hardest by the year-over-year price increases.

EIA Predicts Strong Crude Supply Will Bring Prices Down

The Energy Information Adminstration continues to forecast lower prices through 2014, however, despite the rocky start to the year. Typically, gas prices do begin a calendar year slightly higher because refineries are holding back on new inventories to avoid year-end taxes they would have to pay on stored supplies. Prices generally fall through January and into the start of February. But the EIA is predicting prices will continue declinig through 2014 and, potentially, 2015, with a strong domestic crude oil supply bolstering import supplies.

The weekly petroleum summary from the government forecasts domestic crude oil production to reach levels that have not been seen since the Nixon Administration. “EIA projects crude oil production to average 8.5 million bbl/d in 2014 and 9.3 million bbl/d in 2015, which would be the highest annual rate of crude oil production since 1972,” the agency has reported. “Production from tight oil formations in Texas, North Dakota, and a handful of other states has driven total crude oil production growth for the past four years. Development activity in these key onshore basins and increasing productivity as companies learn how to apply hydraulic fracturing techniques more effectively and efficiently are central to [the] Short-term Energy Outlook forecast.”

EIA Crude Oil Production Chart

U.S. domestic oil production from 1960 onward. The EIA is predicting domestic prodution will rise to levels not seen since the early 1970’s.

Crude Futures Mixed Overseas And Domestically

The EIA report has had little impact on crude futures markets, which have responded in recent months to political unrest in Libya and Syria, driving the cost of Brent Light Sweet Crude higher. Potential resolutions to the Iranian nuclear refinement programs has kept pricing pressure at bay, however, with the potential for new supplies fairly good, if negotiations go well. New talks between world powers and Tehran are expected to continue in Geneva next month.

The political unrest that has kept Libya’s crude production low, at about 300,000 barrels per day, has finally begun to ease. That has helped production double to about 600,000 bbl/d in the past couple weeks, but that level is about half the production that was being output in July 2013.

Prices of West Texas Intermediate augur the best potential for lower gas prices in the immediate future, at least for North America. WTI had spiked in December, closing over $100 per barrel, but prices for February delivery have fallen considerably in the past week, closing Monday at $91.54 per barrel.

DOWNLOAD THE WEEKLY GAS PRICE SURVEY

Gas Prices Plummet, Fall To $3 In Some Areas

Download Gas Price Survey

Download the weekly EIA gas price survey.

The price of gas went into a near freefall during the past week, with many regions of the United States enjoying some of the lowest prices of the year. The biggest decline in prices came for the Midwest, where the average price of a gallon of unleaded plunged nearly 12¢ per gallon to just under $3.20. Across the Gulf Coast, the price of gas is near the $3.00 mark, the lowest regional average in the country. For the broader, nationwide average, the price of unleaded stands, officially, at about $3.29 per gallon, a drop of nearly 7¢ over last week, according to the latest survey from the Energy Information Administration.

One area where drivers are still experiencing higher gas prices is across the West Coast and California. Gas price averages in some areas are more than 30¢ above the national average, with a trip up the Pacific Coast Highway likely to set you back about $3.61 per gallon. Most Westerners, however, are paying about $3.42 per gallon; drivers across the Rocky Mountain states are divvying up slightly less, at $3.37 per gallon, on average.

The price of shipping goods over land has also become a little less expensive, with the price of diesel fuel dropping about 2¢ per gallon during the pas week. Overall, however, diesel prices are lagging regular gasoline in price declines. The average price of diesel remains in the high $3.80’s, with prices in some areas across the West Coast still well north of $4.00 per gallon, particularly in California.

However, the current price trend is likely to continue, and that will bring further relief to regular drivers as well as truckers, going forward. As the price of crude  oil continues falling, the retail price at the pump will follow suit, typically within a couple of months. However, crude prices have been mixed in recent weeks. West Texas Intermediate (WTI) is now well off it’s yearly highs, closing Tuesday at $97.46 for December delivery. However, Brent Light Sweet Crude remained well above the 100-dollar threshhold, primarly because of unreast in Libya this week. That political instability has shaken markets, but it has not caused a run-up in fuel prices like investors witnessed in August, when concerns in both Libya and Syria drove speculation of supply disruptions.

Even so, the EIA has predicted the winter driving season will begin with gas prices at their lowest levels of the year. The EIA is further forecasting gasoline prices to continue falling into 2014, with a brief uptick in January, which is normal for the start of a calendar year.

Gas price projections for 2014

Perhaps the best news for 2014 projections is for the truckers. Diesel prices, which have hovered near or above $4.00 per gallon for the past two years, are projected to finally fall to around $3.76 per gallon, on average, in the coming calendar year. However, those projections are subject to considerable fluctuations due to supply and demand issues, particularly where it concerns refinery capacity and the potential for supply disruptions during the winter.

EIA diesel price projections for 2014

DOWNLOAD THE WEEKLY EIA GAS PRICE SURVEY