Photo credit: AAA
October 1, 2015 - Americans Saving Nearly $350 Million a Day on Lower Gas Prices
- The national average price of gas in September was $2.34 per gallon, which was the lowest monthly average since February 2015. By comparison, the average price of gas in September 2014 was $3.39 per gallon. AAA estimates that American consumers are spending nearly $350 million less on gasoline per day compared to a year ago.
- “Drivers continue to enjoy substantial savings at the pump, but even bigger savings could be in store,” said Avery Ash, AAA spokesperson. “Barring any major supply disruptions, the national average could even test the $2 per gallon benchmark before the end of the year for the first time since 2009.”
- Today’s national average price of gas is $2.29 per gallon, which is the cheapest average for this time of year since 2004. Today’s average is about $1.04 per gallon less than a year ago and 19 cents less than a month ago. Gas prices are significantly cheaper than in previous years due to the relatively low cost of crude oil.
- Average U.S. gas prices have declined about 52 cents per gallon since hitting a 2015 peak price of $2.80 per gallon on June 15. The national average declined 26 out of 30 days in September for a total savings of 19 cents per gallon. Gas prices have dropped during the previous few weeks due to declining fuel demand and the switchover to less expensive winter-blend gasoline.
- Many Americans drive less after Labor Day and the end of the summer driving season, which reduces gasoline demand. This decline in driving can lead to increased fuel supplies in autumn and winter, which ultimately results in cheaper gas prices for drivers.
- Gas stations in many parts of the country switched over to less expensive winter-blend gasoline on September 16. As outside temperatures cool in the autumn, gasoline is less likely to evaporate and contribute to air quality issues. Producers can blend relatively inexpensive butane into the fuel to meet octane requirements this time of year, and some of these savings are passed on to consumers. Butane is more likely to evaporate in hot temperatures and is not used in summer-blend gasoline.
- Gas prices remain relatively inexpensive compared to recent years due to the low cost of crude oil. WTI oil prices remained relatively steady in September and closed yesterday at $45.09 per barrel. By comparison, the cost of oil a year ago was about twice as high at $90.73 per barrel.
- Oil prices have dropped in recent months due to abundant oil production and a weaker global economy, particularly in China. China is the world’s largest oil importer, and the downturn in its economy has raised questions about the country’s future oil demand. Oil supplies also remain abundant in the United States with commercial stocks about 28 percent higher than a year ago.
- Despite a bearish sentiment prevailing in the oil market, gas prices remain relatively high compared to the cost of crude oil, in part due to record-high levels of driving this year. Total U.S. driving topped 1.82 trillion miles during the first seven months of the year, beating the previous record of 1.77 trillion set during the first seven months of 2007, according to the latest estimates by the Federal Highway Administration. Driving is expected to remain relatively high through the end of the year, which means 2015 could go down as the busiest driving year of all time.
- The national average price of gas has remained relatively unchanged over the past week, and this trend may continue well into October as refineries conduct seasonal maintenance. Nevertheless, a seasonal decline in driving this winter should help push gas prices below $2 per gallon in most parts of the country by the end of the year as long as crude oil costs remain steady.
- “This autumn’s refinery maintenance season is expected to be heavier than in years past because refineries ran at such high rates during the summer,” continued Ash. “Retail averages in some regions temporarily could rise during this maintenance period, yet we would expect prices in most areas to remain relatively low compared to recent years.”
- Refineries typically conduct maintenance in the autumn and spring when demand for gasoline, diesel and heating oil is relatively low. More refineries than typical have scheduled maintenance for the next few weeks, but much of this maintenance should wrap up by December, which would allow a steady decline in gas prices later in the year.
- The national average price of gas has fallen in October for three years in a row. Gas prices typically drop in October due to a seasonal decline in both driving and fuel demand. While driving is expected to remain relatively strong because of low gas prices, we would expect driving to decline from summertime highs through the end of the year based on typical seasonal trends.
- Hurricane Joaquin may impact regional gas prices in the Mid-Atlantic or Northeast next week. Hurricanes have the potential to disrupt refinery production, pipeline transportation, wholesale deliveries and gas station operations. Small hurricanes on the East Coast generally have a very limited and brief impact on prices, while larger storms, such as Hurricane Sandy, can disrupt regional fuel supplies and distribution for a number of weeks. AAA recommends that drivers in the affected areas fill their vehicle’s gas tanks in advance of the storm in case there are any distribution problems.
- Crude oil remains the primary wildcard in determining future gas prices. If OPEC cuts production, the Chinese economy grows stronger or if Iranian oil is unable to enter the market, then oil prices could rise and push up the cost of gasoline. There also is a possibility that oil prices could drop significantly in the coming months given the weaknesses in the global economy and because refineries conducting maintenance will need less crude oil.
- More than one in five U.S. gas stations (21 percent) are selling gas for less than $2 per gallon today.
- Five states have average gas prices below $2 per gallon, including South Carolina ($1.96), New Jersey ($1.97), Mississippi ($1.98) and Alabama ($1.99). An additional five states have average prices within a dime of $2 per gallon, including Tennessee ($2.00), Louisiana ($2.03), Virginia ($2.03), Texas ($2.05) and Arkansas ($2.06).
- Average gas prices this week dropped below $3 per gallon in every state for the first time since June 2009. The five most expensive state averages include: Alaska ($2.96), California ($2.96), Nevada ($2.92), Hawaii ($2.89) and Utah ($2.66).
- Drivers can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at com/mobile.
Source: AAA
