AAA: Gas prices reach six-month low

While the national average has remained flat over the last two weeks, consumers this week paid the lowest average gas prices since late February.

The national average price for regular unleaded gasoline dropped to $3.44 per gallon Friday, unchanged from last week.  Friday’s average price is five cents lower than one month ago and 15 cents lower than year ago prices.  The national average has remained under $3.50 per gallon for 33 consecutive days.  The summer driving season ended this week as the fourth most expensive on record, averaging $3.58 per gallon, fractions of a cent less than a year ago.  The summer driving season runs from Memorial Day through Labor Day, and is the busiest time of the year for driving. The summer driving season average for the previous few years was $3.58 (2013), $3.55 (2012), $3.65 (2011), $2.73 (2010), $2.59 (2009) and $3.95 (2008).

While geopolitical developments in Ukraine and Iraq remain front page news, oil markets have marched steadily lower reflecting the assessment that global supplies remain unaffected. This slide in oil prices continued early in the-week as West Texas Intermediate (WTI) crude dropped $3.08 to $92.88 per barrel at the close of formal trading on the NYMEX.Tuesday’s price marked a decline of more than $10 per barrel since the start of July and was the lowest settlement sinceJanuary14.  Crude oil settled at $93.29 at Friday’s close, down nearly three percent on the week.

The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories slipped 900,000 barrels last week to 359.6 million barrels.  Gasoline stocks dropped 2.3 million to 210 million barrels.  As strong as gasoline demand was, coming in at the highest level since the week of July 23, 2010, the 9.48 million barrels per day (bpd) reading for the week ending Aug. 29 is expected to be the “Swan Song” with expectations for a weak reading in the next report. However, the strong one-week number should send the four-week average higher and possibly put demand ahead of last year.

“The big crunch in summer travel is done and most of us can look forward to lower gas prices during the next few months,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “It was truly a summer of contrasts with consumers paying the highest seasonal prices in years to begin the summer, but ending with the lowest prices since 2010.  If we can get through September without any major refinery or global supply issues, we could see more gas station prices drop below $3.00 per gallon this fall.”

Gasoline demand and prices generally fall in September through the end of the year as people drive less and because refineries can produce less expensive winter-blend gasoline.  The price of gas in September has declined four out of the five previous years for an average of eight cents per gallon. Last year, national average gas prices fell by 19 cents per gallon in September.  AAA expects gas prices nationally could decline another 10-20 cents per gallon by the end of October.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

	9/7/14	Week Ago 8/3/14	Year Ago 8/10/13
National	$3.44	$3.44	$3.58
Virginia	$3.18	$3.19	$3.36
Charlottesville	$3.14	$3.13	$3.30
Norfolk Area	$3.21	$3.22	$3.38
Richmond	$3.11	$3.11	$3.32
Roanoke	$3.09	$3.09	$3.27
Crude Oil	$93.29 per barrel (at Friday’s close, 9/5/14)	$95.96 per barrel (Friday 8/29/14 close)	$110.53 per barrel (9/5/2013)