The 100-plus days of plummeting gas prices across the country have come to an end. The national average price for regular unleaded gasoline has reversed course, jumping to $2.17 per gallon Friday, up 12 cents in the past week. Yet despite the double-digit week-over-week increase, prices remain 2 cents less than one month ago and $1.10 less than one year ago. The national average price of gas reached a current 2015 low on January 26 of $2.03 per gallon, which was the lowest average since March 27, 2009.
Global oil prices are expected to remain relatively low during the first half of 2015, largely due to OPEC’s paradigm-shifting decision not to support higher oil prices by cutting production. Saudi Arabia, a key player in the decision and OPEC’s largest producer, is well positioned to weather the current volatility due to low production costs and a significant amount of savings accumulated during years of relatively high crude prices. At the close of formal trading on Friday, crude oil settled at $51.69 per barrel, up seven percent on the week.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories grew by 6.3 million barrels to 413.1 million barrels, the highest level in decades. Gasoline stocks rose 2.3 million barrels to 240.7 million barrels. Total stocks of gasoline are only about 11 million barrels below the weekly peak near 251 million barrels in March of 1990. January gasoline demand to this point had been spectacular, but last week’s decline (likely due to the snowstorm on the East Coast) brings implied demand to 8.442 million barrels per day (bpd), a decline of 580,000 bpd. While the drop looks large, the actual demand figure is in line with implied demand figures for the last five years.
“It certainly appears both crude oil and pump prices have bottomed out,” said Martha M. Meade, Manager of Public and Government Affairs AAA Mid-Atlantic. “The price of crude oil hit a bottom in the mid-$40 range and has since rebounded to the mid-$50 range, along with Midwest refinery issues have caused gas prices to reverse a 120-day downward trend with double-digit increases this week. Typically, gas prices rise 30 to 50 cents per gallon now through mid-spring due to increased demand and routine refinery maintenance. Motorists are likely to see the upward price trend continue for the foreseeable future as a result of these factors.”
Gas prices generally are at or near seasonal lows in January due to relatively weak demand. Many Americans cut back on driving and travel during the cold winter months, which can allow gasoline supplies to build. AAA expects gas prices to increase this month due to refinery maintenance and decreased production. It is not uncommon for gas prices to increase 30-50 cents per gallon between early February and the middle of spring. Gas prices in February have increased during the previous five years by an average of 22 cents per gallon. However, gas prices should remain less expensive than in recent years due to lower crude oil costs. Barring any events that could cause the global price of oil to increase substantially, AAA does not expect the national average price of gas to rise above $3 per gallon in 2015.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
| 2/8/15 | Week Ago
2/1/15 |
Year Ago
2/8/14 |
|
| National | $2.18 | $2.06 | $3.27 |
| Virginia | $2.08 | $1.95 | $3.13 |
| Charlottesville | $2.06 | $1.95 | $3.14 |
| Norfolk Area | $2.14 | $2.00 | $3.15 |
| Richmond | $2.05 | $1.88 | $3.06 |
| Roanoke | $2.04 | $1.92 | $3.11 |
| Crude Oil | $51.69
per barrel (Friday 2/6/15 close) |
$48.24
per barrel (Friday 1/30/15 close) |
$97.84
per barrel (2/6/14) |
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Chris Graham
