Gas prices continue to drop across the country to the lowest levels in four years. The national average price of regular grade gasoline dropped eight cents in the past week to $2.71 Friday, which is down 25 cents in the past month and 54 cents below year ago prices. U.S. average gas prices have dropped 71 (through Friday) days in a row for a total of 64 cents (throughFriday) per gallon. This is the longest streak of consecutive price declines since autumn 2008. Average gas prices have dropped about 95 cents per gallon since reaching a high of $3.70 on April 28, 2014. AAA estimates that Americans are saving about $350 million per day on gasoline compared to highs during the spring and summer.
Gas prices have dropped to the lowest levels in four years due to significantly lower crude oil costs. Crude oil prices dropped even lower last week when, despite the falling price of global oil, the Organization of Petroleum Exporting Countries (OPEC) elected to maintain its collective production ceiling when the group met last Thursday. The news sent West Texas Intermediate (WTI) plummeting more than ten percent ($7.54) last Friday (11/28) to settle at $66.15 per barrel. The ultimate market implications for OPEC’s inaction remain unclear, however many market watchers have indicated that they see it as a signal that the oil cartel is more focused on maintaining market share and hoping for prices to stabilize in the winter months as global demand increases. At the close of Friday’s NYMEX formal trading session, crude oil settled at $65.84 per barrel, nearly unchanged from a week ago. Domestic crude oil prices (WTI) have dropped more than $40 per barrel since June with prices last week reaching levels not seen since September 2009.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories declined 3.7 million barrels to 379.3 million barrels. Gasoline inventories increased 2 million barrels to 208.6 million barrels. Last week, gasoline demand came in at 9.425 million barrels per day (bpd), the highest one-week reading since the week ending Aug. 29. The Thanksgiving holiday along with multi-year lows for retail prices are the key reasons behind the strong gasoline demand. The strong weekly demand figure has pushed the four-week average to 9.22 million bpd, the highest four-week reading since July of 2011.
“Gas prices have fallen at a remarkable pace that would have been unthinkable just a few months ago,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “We could see prices drop another 15-20 cents per gallon through the holiday season, meaning motorists will likely pay the lowest December gas prices since 2009.”
AAA expects gasoline to drop another 15-20 cents per gallon in the near term as retail prices catch up with steep declines in the cost of both crude oil and wholesale gasoline. Gas prices likely will remain relatively low this winter due to abundant supplies and OPEC’s decision to maintain crude oil production. Gas prices typically remain low in winter because people drive less and do not use as much gasoline during the colder months. There is little reason to expect gas prices to increase significantly until spring unless there is an unexpected spike in the cost of crude oil or an unanticipated disruption to domestic refining or distribution, which could send prices higher in an impacted region.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
| 12/7/14 | Week Ago
11/30/14 |
Year Ago
12/7/13 |
|
| National | $2.68 | $2.78 | $3.26 |
| Virginia | $2.53 | $2.62 | $3.20 |
| Charlottesville | $2.53 | $2.63 | $3.17 |
| Norfolk Area | $2.56 | $2.65 | $3.23 |
| Richmond | $2.47 | $2.55 | $3.18 |
| Roanoke | $2.52 | $2.62 | $3.08 |
| Crude Oil | $65.84
per barrel (at Friday’s close, 12/5/14) |
$66.15
per barrel (Friday 11/28/14 close) |
$97.38
per barrel (12/5/13) |
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Chris Graham
