AAA: Gas prices continue downward movement

Gas prices have dropped recently despite ongoing refinery problems, and prices should continue to fall this autumn due to declining demand and the switchover to winter-blend gasoline.

Today’s national average price of gas is $2.48 per gallon, which is 12 cents less than a week ago and 95 cents less than a year ago. The average gas price in Virginia is $2.21 a gallon, down nine cents from last week, and 98 cents from a year ago.

As the remnants of Tropical Storm Erika continue through the eastern Gulf of Mexico, it draws to mind the tenth anniversary of Hurricane Katrina (August 29), one of the worst natural disasters in American history.  In addition to destroying lives and causing billions in property damage, Hurricane Katrina wreaked havoc upon United States refinery and production capacity in the Gulf of Mexico. Gasoline prices surged above $3 per gallon for the first time ever in the eight-day period immediately following from the vicious storm – September 3-10, 2005.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

Year-over-year discounts in the price of retail gasoline persist, largely due to the price of crude being significantly discounted from this date in 2014. Pump prices in nearly every state (48 and Washington, D.C.) are more than 50 cents per gallon lower than this same date last year.

“The biggest cost to what motorists pay at the pump, almost 65 percent, is the cost of crude oil,” says Martha Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Motorists in Virginia are already reaping the benefits of the low cost of crude oil at the pump, as drivers in some areas of the Commonwealth are filling up for under $2 per gallon.”

At the close of Friday’s formal trading on the NYMEX, WTI settled at $45.33 per barrel. Crude oil prices have continued to sag, due to persisting global oversupply and evidence of slower than projected growth in the Chinese economy. Both crude oil benchmarks (Brent and West Texas Intermediate) ended last week at their lowest levels since March 2009, and the market is expected to remain volatile in the near term.

As the final week of the summer driving season comes into focus, Americans show signs of wanting to take one last road trip. On August 20, the U.S. Department of Transportation’s (USDOT) Federal Highway Administration (FHWA) released a report showing that U.S. driving topped 1.54 trillion miles in the first half of 2015, beating the previous record – 1.5 trillion, set in June 2007. While demand for gasoline has slowed, production still remains strong. As prices at the pump continue their slow decline, the drop in demand may not be as pronounced as in past years.