Low gas prices: It’s all about the oil

Oil prices continue a 14-month dip, revolutionizing prices at the gas pump. Today’s national average price is $1.90, down 7 cents from last week, down 11 cents from last month and down 18 cents from last year.

The average in Virginia today is $1.73 a gallon, down five cents this week. Scattered locations in the Greater Augusta County area were advertising $1.59 a gallon for regular unleaded this morning.

AAA is projecting that gas prices should remain relatively low because there is more than enough oil and gasoline around the world to meet demand.

According to a recent survey by the National Association of Convenience Stores (NACS), retail gasoline prices largely below $2 gallon have not fostered any new enthusiasm among American consumers. Gasoline price impact on consumer psyche remains high, with 75 percent of Americans admitting that gas prices influence their feelings about the economy, but that number is down 10 points from Jan. 14, 2015 when gas prices were about $1.50/gal higher.

WTI crude closed out Friday’s formal trading session on the NYMEX down $3.74, settling at $29.42 per barrel. Expectations that prices will continue to hover at levels last seen more than a decade ago are beginning to surface and market watchers are paying close attention to both China and the Middle East. Crude settled below the $30 per barrel mark and dipped into the $20 per barrel range during intra-day trading mid-week.  The last time crude oil closed below $20 per barrel was October 31, 2003.

“AAA predicts pump prices will remain relatively low due to the over-abundance of oil and gasoline around the world to meet demand,” said Martha Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “As crude oil prices continue to drop, motorists will undoubtedly continue to enjoy savings at the gas pumps.”

The U.S. Energy Information Administration (EIA) expects monthly retail prices of U.S. regular gasoline to reach a seven-year low of $1.90/gal in February 2016, before rising during the spring.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)