AAA: Motorists ring in New Year with record-high gas prices

Motorists rang in 2014 paying the highest price for gasoline on record for New Year’s Day ($3.32), marking the fifth consecutive January 1 that Americans have paid more at the pump than the year prior and the fourth straight year with a new record to start the year.  The national average prices to begin 2011, 2012 and 2013 were $3.07, $3.28 and $3.29 respectively.

Today’s national average price at the pump is $3.33 per gallon.  This is five cents more expensive than one week ago, seven cents more than one month ago and four cents more than the same date last year.  After falling on 19 of 22 days, the national average has now increased for 15 straight days.  The rising national average has been reflected across the country.  Motorists in every state are paying more at the pump than one week ago.

Higher crude oil prices have supported rising retail gas prices for motorists.  Last Friday, after 48 consecutive settlements below $100 per barrel dating back to October 21, West Texas Intermediate (WTI) crude oil prices climbed back into triple digits and settled at $100.32.  The return above $100 proved, at least for now, to be temporary, as WTI returned lower this week, settling at $93.96 per barrel Friday.  The commodity slipped under the $94 per barrel mark for the first time since the beginning of December.  In the last two days of the trading week, crude prices shed $4.50 or 4.3 percent.

Crude oil stocks dropped 7 million barrels to 360.6 million barrels, a drop that was larger than expected.  This marked the fifth straight week where crude oil supplies have dropped, draining lower from 391 million barrels back at the end of November.  Gasoline stocks saw a build of 800,000 barrels, half of what was expected, to 220.7 million barrels.  Gasoline demand took a minor step back, slipping 283,000 barrels per day (bpd) to 8.9 million bpd.

“Despite a recent run up in prices at the pump, AAA anticipates that prices will likely average slightly less in 2014, especially as cars are made more fuel efficient and refineries expand production,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “While there are several things working in favor of drivers this year, unforeseen events, such as an uprising in geopolitical tensions, are also a factor.  There are no guarantees when it comes to gas prices, which underscores the need for our leaders to focus on a long-term energy strategy.”

In 2013 consumers paid an average of $3.49 per gallon for gas, making the past year the least expensive year to fill up since 2010.  In 2012 pump prices averaged $3.60 per gallon, which was the most expensive ever.  Gas prices in 2011 were the second highest on record at $3.51 per gallon, while 2013 holds the rank of third most expensive.

Gas prices most likely will average slightly less in 2014 as refineries continue to expand production capacity and increasingly rely on North American crude oil.  Increased refinery capacity and domestic crude oil production should help provide a cushion in case something goes wrong, but there are no guarantees when it comes to gas prices.  There will remain an outside chance of paying higher prices due to unexpected global events or significant economic growth.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

AAA is the most comprehensive resource for gas prices.  Unlike the Lundberg Survey of 7,000 gas stations, AAA reports reflect actual prices from credit card transactions at more than 100,000 gas stations in the U.S.