July 6, 2017 - At $2.23, today’s average national gas price is the cheapest the country has seen all year. On the week, gas prices fell in 46 states. Only Illinois, Oklahoma and Washington, D.C. saw prices increase, albeit by one cent each, while Hawaii and Maine remained flat. South Carolina continues to carry the cheapest gas in the country at $1.90. Today, consumers can find gas for $2.00 or less at one out of every four gas stations in the country.
“The combination of tepid demand and increased gasoline and crude output continues to put downward pressure on gas prices,” said Jeanette Casselano, AAA Spokesperson. “While holiday gasoline demand is likely to reach new highs, it will probably not be enough to cause a significant increase on the price of gasoline in the coming week.”
The last time gas prices were this cheap for the Independence Day holiday was 2005. That year, the price on July 4 was $2.23, which was the first time gas prices ever rose above the $2.00 mark for the holiday. Today’s price is three cents less than a week ago, 15 cents less than a month ago and four cents less than this day a year ago.
Gas prices on the West Coast decreased one cent on average on the week yet continue to be the most expensive in the country: Hawaii ($3.05), California ($2.94), Alaska ($2.83), Washington ($2.81), Oregon ($2.66), Nevada ($2.66) and Arizona ($2.26).
For a second week, the Energy Information Administration (EIA) reported a decline of 200,000 bbl in gasoline stockpiles in the region. The decline could be the start of a trend over the next month as the region increases exports due to increased demand from Mexico. This follows Mexico’s Salina Cruz refinery shutdown last week on the heels of damage from Tropical Storm Calvin. While the stock drop was sizable, the West Coast is generally an export market. As for imports in the region, those dropped to their lowest mark since early April.
While all states in the Rockies region saw prices drop on the week, two states landed on the top 10 states with the largest weekly change list: Wyoming (-4 cents) and Colorado (-3 cents). On average, the price for gasoline in the region is $2.39. Idaho ($2.57) and Utah ($2.53) lead the five-state region with the most expensive gasoline price.
Great Lakes and Central States
All states in the Great Lakes and Central states, except Illinois, saw gasoline prices drop on average by three cents on the week. Three states saw of some of the country’s largest price declines this week: Ohio (-8 cents), Michigan (-7 cents) and Kentucky (-4 cents). Meanwhile, at $2.29/gallon, Illinois (+3 cents) was one of only three states nationally to see prices increase.
Gasoline production in the region rose for a third consecutive week to the highest in a year, according to the EIA. At the same time, stockpiles declined by 600,000 bbl to register at slightly north of 54 million bbl, which is 1.5 million higher than levels a year ago.
South and Southeast
The South and Southeast carry the country’s cheapest gasoline prices. The average price is $2.03 in the region. On the week, two states landed on the top 10 list for largest prices drops in the country: Florida (-5 cents) and Texas (-4 cents), while the region saw gasoline prices drop by three cents on average. According to the EIA, gasoline stocks drew down by 500,000 bbl.
Regional refineries continue to run at high utilization rates, raising the need to push barrels to all markets, including outside of the U.S.
Mid-Atlantic and Northeast
For a consecutive week, gasoline prices declined in 14 Mid-Atlantic and Northeast states on average by two cents on the week. Washington, D.C. was the outlier, seeing a one-cent gas price increase on the week. However, compared to one month ago, gas prices are on average 12 cents cheaper in the region. Consumers are seeing the greatest benefits month-over-month in Delaware (-19 cents), Maryland (-16 cents), Pennsylvania (-15 cents), Virginia (-14 cents) and North Carolina (-13 cents).
Gasoline stockpiles were on an upward swing on the week, rising by 600,000 bbl and this was the only region in the country to see stocks increase. The stock increase, paired with lackluster demand, contributed to the gasoline prices drop.
Oil Market Dynamics
After making gains toward the end of the week, West Texas Intermediate continues to float above $46 per barrel on Monday morning. The market has been steadily climbing after EIA data showed that domestic oil production lowered by about 100,000 b/d for the week ending on June 23. Moreover, last week Baker Hughes, Inc. reported that for the first time in 24 weeks, the U.S. lost two oil rigs – bringing the total rig count to 756. While the decline might signal that U.S. production may be headed for a new trend, which could lead to tightening between supply of oil and demand for refined products, the U.S. oil rig count is still up by 415 when compared to the count last year at this time. This significant number of rigs means that the market still has a long way to go before decreased production in the U.S. has a major impact on the price per barrel of crude. In the meantime, drivers will continue to benefit from high crude production rates that have contributed to record refinery output rates this year.
Additionally, in EIA’s report for the week ending June 23, it noted that gasoline demand dropped by 278,000 b/d and refinery output grew by 200,000 b/d. The drop in demand is unlikely to hold for the next reporting period given the Independence Day holiday weekend. In fact, in light of the record-breaking Memorial Day weekend demand for gasoline, demand is likely to surge to new heights in the next EIA report as AAA forecasted drivers are expected to hit the road in record numbers for the holiday.
Most market watchers will await EIA’s report this week to see if output rates begin to reverse course, which could increase prices later on during the summer. For now, refinery rates continue to exceed demand for gasoline, which is helping drivers save at the pump.
Motorists 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 AAA.com/mobile.