Good news: Double-digit drops in prices at the gas pump

AAA LogoGas prices have dropped by double digits in the past month and just in time for travelers wishing to take last minute vacations prior to the end of summer. The national average price for regular unleaded gasoline dropped to $3.47 per gallon Friday, down a penny from last week. Friday’s average price is 14 cents lower than one month ago, and 7 cents lower than year ago prices. The national average has fallen 21 cents per gallon since the official start of summer onJune 21. This week, Mid-Atlantic states, Maryland, New Jersey, Pennsylvania and Virginia posted the largest two week gas price decreases in the nation.

Crude oil prices continued to trade below the $100 per barrel mark this week, a trend that began July 31.  The commodity has traded below $100 for 12 straight closings through Friday, August 15.  Thursday, crude oil dropped to $95.58 per barrel, the lowest settlement price over the past two weeks.  Friday’sclosing price rose to $97.35 per barrel over concerns that Ukraine forces attacked a Russian convoy entering the country.

The U.S. began airstrikes last week in Iraq, in response to the continuing escalation of violence by the Islamic State of Iraq and Levant (ISIL). As the world’s seventh-largest oil producer, a disruption in production could impact the global supply. The concentration of fighting in the northern portion of the country has prevented disruption to supply lines since most oil is produced in areas in the south. Market watchers continue to monitor overseas tensions, but none of these conflicts have resulted in a disruption to oil supplies, which have kept gas prices low.

The Energy Information Administration (EIA) noted in its weekly report that U.S. crude oil inventories rose 1.4 million barrels to 367 million barrels. Gasoline stocks dropped 1.2 million barrels to 212.7 million barrels. Gasoline demand tipped back lower last week in what may be described as a “make up call” off of last week’s multi-year high. Implied demand for the week ending August 8 came in at 8.922 million barrels per day (bpd), a drop of 437,000 bpd from the previous week. Last week’s demand number stands out as being soft since it’s the lowest gasoline demand figure for the second week of August since 2001.  However, even with the large drop in gasoline demand, the four-week average is still just above 9 million bpd at 9.02 million bpd, running 1.3% behind last year at this time.

“Travelers in the Mid-Atlantic area wishing to squeeze in a last minute summer road trip will find the most favorable gas prices since the start of summer,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “Market watchers continue to monitor overseas tensions, but none of these conflicts have resulted in a disruption to oil supplies, which have kept gas prices low.”

AAA expects prices to continue to trend downward, especially in the second half of the year when refineries shift over to a less costly winter blend of gasoline. The national average price for gasoline has continued its downward trend despite high-profile conflicts in overseas oil producing countries and declining domestic refinery production.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

8/17/14Week AgoYear Ago
National$3.46$3.48$3.54
Virginia$3.23$3.26$3.36
Charlottesville$3.14$3.17$3.24
Norfolk Area$3.30$3.33$3.42
Richmond$3.16$3.19$3.32
Roanoke$3.13$3.18$3.22
Crude Oil$97.35per barrel(at Friday’s close, 8/15/14)$97.65per barrel(Friday 8/8/14)$107.33per barrel(8/15/13)
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