U.S. motorists are paying an average price at the gas pump Friday ($2.08 per gallon) that is nearly 44 percent lower than the 2014 peak of $3.70 reached on April 28.
The national average continues to test lows not seen since May 2009 and has now dropped a record 113 consecutive days (since September 25) for a total decline of $1.22 per gallon during this span. Friday’s national average price for regular gasoline was $2.08 per gallon, down nine cents from the previous week, 45 cents less than a month ago and $1.22 below the same date last year.
The dramatic slide in retail gas prices has been driven by a similar plummet in global crude oil prices since the end of the summer, as the global price of crude oil has lost more than half its value since mid-2014. This decline in the price of oil has been a product of weak demand combined with abundant supply. While lower gas prices are certainly a welcome relief for consumers, the broad impact of sustained low oil prices are front of mind for many industry stakeholders. OPEC has reiterated that it will not intervene in the market to force prices higher and plans to sustain its current production levels, with the earliest possibility for supply reductions reportedly pushed to their next meeting scheduled for June. Sustained low prices for crude can also potentially influence the way global markets are assessed. At the close of formal trading on Friday, crude oil settled at $ 48.69 per barrel, up less than 50 cents on the week.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories saw a build of 5.4 million barrels to 387.8 million barrels. Gasoline inventories saw a build of 3.2 million barrels to 240.3 million barrels, the first time inventories have topped the 240-million-barrel mark since February 2011. A large build in gasoline inventories at this time of year is not much of a surprise as the average build comes in at nearly 4 million barrels over the last five years. Gasoline demand was steady to slightly higher by the EIA metrics with a 66,000- barrels per day (bpd) bump higher to 8.875 million bpd. The four-week average which still grabs the pre-Christmas high demand comes in at just over 9.2 million bpd, a more than 7% increase.
“It is conceivable the average U.S. retail price for regular grade of gasoline will finally dip below $2 a gallon in the next week or so, for the first time since early 2009, said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “It is already an accomplished fact in half of the states and at half of the gas stations across the country.”
The lower gas price trend is likely to continue into 2015, with the year promising to provide much bigger savings to consumers as long as crude oil remains relatively cheap. It would not be surprising for U.S. consumers to save $50-$75 billion on gasoline in 2015 if prices remain low. Barring any major increases in the global price of crude oil, AAA expects the national average price for regular unleaded gasoline to remain below $3.00 per gallon in 2015.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
| 1/18/15 | Week Ago
1/11/15 |
Year Ago
1/18/14 |
|
| National | $2.07 | $2.14 | $3.29 |
| Virginia | $1.99 | $2.05 | $3.19 |
| Charlottesville | $1.98 | $2.05 | $3.17 |
| Norfolk Area | $2.02 | $2.09 | $3.23 |
| Richmond | $1.91 | $1.98 | $3.15 |
| Roanoke | $1.96 | $1.99 | $3.11 |
| Crude Oil | $48.69
per barrel (at Friday’s close, 1/16/15) |
$48.36
per barrel (Friday 1/9/15 close) |
$93.96
per barrel (1/16/14) |
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Chris Graham
