U.S. motorists are paying the lowest average gas price since April 2009, and the national average is likely to slide below $2 per gallon before the end of the month. The average price at the pump has dropped a record 120 consecutive days, for a total a savings of $1.30 per gallon during this stretch. The national average price for regular unleaded gasoline dropped to $2.04 per gallon Friday, down four cents from the previous week, 34 cents less than one month ago and $1.25 less than one year ago. On Friday, drivers in 28 states are paying averages below $2 per gallon; up 18 from one week ago.
The average price at the pump is directly connected to the global price of crude oil, with crude costs accounting for more than half of the price of gasoline. Like pump prices, crude oil prices have also posted multi-year lows due to global supply outpacing demand, which has kept downward pressure on the price of crude and ultimately meant hefty declines in retail gasoline prices.
While increased seasonal demand and maintenance at refineries may result in a typical 30-50-cent increase in pump prices this spring, a major global price recovery is unlikely to be the horizon, absent any major market disruptions or geopolitical events. These sustained lower prices would be a result of projected shifts in the balance between global oil supply and demand. Crude prices are less than half of what they were six months ago, and sustained low prices will also continue to test the resiliency of countries that rely on oil revenue to fund government services. At the close of formal trading on Friday, crude oil settled at $45.59 per barrel, down six percent on the week.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories increased 10.1 million barrels to 397.9 million barrels, the highest weekly increase in at least 14 years. U.S. crude inventories are at the highest level for this time of year in at least the last 80 years. Gasoline inventories saw an increase of 600,000 barrels to 240.9 million barrels, and remain well above average.
“Motorists are universally experiencing savings at the gas pumps, with prices more than $1 per gallon less than this time last year and at the lowest levels since April 2009,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “And the saving is likely to continue as AAA predicts the national average price for gasoline is likely to slide below $2.00 per gallon before the end of the month.”
AAA expects the national average to remain below $3 per gallon in 2015, barring any major fluctuations in the global price of crude. However, while increased seasonal demand and maintenance at refineries may result in the usual 30 to 50-cent increase in pump prices this spring, without substantial market disruptions or dramatic geopolitical events, a major global price recovery is unlikely to be on the horizon.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
| 1/25/15 | Week Ago
1/18/15 |
Year Ago
1/25/14 |
|
| National | $2.04 | $2.07 | $3.29 |
| Virginia | $1.96 | $1.99 | $3.17 |
| Charlottesville | $1.96 | $1.98 | $3.16 |
| Norfolk Area | $2.00 | $2.02 | $3.21 |
| Richmond | $1.90 | $1.91 | $3.12 |
| Roanoke | $1.93 | $1.96 | $3.11 |
| Crude Oil | $45.59
per barrel (at Friday’s close, 1/23/15) |
$48.69
per barrel (Friday 1/16/15 close) |
$97.32
per barrel (1/23/14) |
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