AAA: Gas prices could drop in time for summer

AAA-LogoThe price at the gas pump continues to reflect seasonality as refineries complete scheduled maintenance and prepare for the summer driving season.  Friday’s national average price at the pump was $2.40 per gallon, unchanged from one week ago and five cents less than one month ago.  Consumers continue to experience significant year-over-year savings, with retail prices down $1.21 per gallon.

The national average price for regular unleaded gasoline has fallen for 26 of the past 34 days, after reaching a peak-to-date price for 2015 of $2.46 per gallon on March 7.  While prices could still rise again this spring if global crude prices rise or domestic refineries experience production issues, the timing of this seasonal peak would be within the range of recent years but the “high” would be significantly lower.  Peak dates and prices in recent years were April 28, 2014 ($3.70); February 27, 2013 ($3.79); April 5 and 6, 2012 ($3.94); and May 5, 2011 ($3.98).

The global oil market remains in flux due to news of declining revenues for producers as well as the potential for additional supply to enter the market. The Organization of the Petroleum Exporting Countries (OPEC) member nations posted their lowest net export revenues since 2010, due to reductions in oil exports from the countries and the sharply lower price of crude. Market watchers remain focused on the oil cartel for any signs of a move to cut production to stabilize prices, and with news of a framework for a nuclear agreement having been reached between Western powers and Iran, speculations of oversupply are expected to keep downward pressure on the market. Iran holds the world’s fourth largest proven reserves of crude oil but since 2012 sanctions have limited the OPEC member country’s ability to participate fully in the global oil market.  Early in the week crude oil jumped to a 2015 high just shy of $54 per barrel.  At the close of Friday’s formal trading on the NYMEX, crude oil settled at $51.64 per barrel, up nearly six percent on the week.

The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories saw another strong build, the largest one-week jump since March 2001, jumping 10.9 million barrels to 482.4 million barrels.  Crude stocks continue to exceed modern-day records and for the third time this year the one-week build topped 10 million barrels.  Gasoline stocks picked up 800,000 barrels to move just shy of 230 million barrels.  Gasoline demand saw a sharp drop of 8.61 million barrels per day (bpd), good for an 824,000 bpd drop week to week.

“This spring has been relatively pain free at the pumps for most drivers,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “U.S. stockpiles of crude oil are unparalleled, which have helped push down prices.  Unless there are new regional refinery issues or global crude prices turn markedly higher, drivers can expect to see pump prices continue to slide leading up to the start of the summer driving season.”

AAA sees the possibility of lower gas prices by the summer for U.S. consumers if refinery maintenance ends smoothly and if crude oil remains relatively cheap. It is even possible that gas prices will return to near $2 per gallon in some areas, as long as there are no unexpected problems in the meantime.  AAA does not expect the national average to rise above $3 per gallon this year.  The cost of crude oil is likely to be the most important factor influencing gas prices over the next few months. Many experts believe that crude oil prices may drop further due to abundant supplies, but international conflict, declining production or other issues could result in higher prices.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

4/12/15 Week Ago

4/5/15

Year Ago

4/12/14

National $2.39 $2.39 $3.63
Virginia $2.20 $2.19 $3.46
Charlottesville $2.21 $2.21 $3.41
Norfolk Area $2.17 $2.17 $3.50
Richmond $2.21 $2.20 $3.45
Roanoke $2.16 $2.17 $3.39
Crude Oil $51.64

per barrel

(Friday 4/10/2015 close)

$49.14

per barrel

(Thursday 4/2/15 close)

$103.40

per barrel

(4/10/14)