Prices at the gas pump continue to plummet. The national average price of gas today dropped below $3.00 per gallon ($2.995/gal) for the first time since Dec. 22, 2010, ending its longest streak ever above that price.
The current gas price is six cents less than one week ago, 33 cents less than one month ago and 28 cents below one year ago. Saturday’s average marks the lowest average since December 22, 2010. The national average has now dropped for 37 consecutive days (through Saturday) for a total of 34 cents per gallon. The national average gas price was above $3.00 for 1,409 consecutive days. During that time, U.S. gas prices averaged $3.52 per gallon and climbed as high as $3.98 per gallon on May 5, 2011.
Gas prices typically decline this time of year, but have fallen more swiftly than typical due to the sharply declining price of crude oil. The cost of crude oil accounts for approximately two-thirds of the price consumers pay for gasoline, which means, barring any other factors, gas prices will continue to fall as long as crude oil prices decline. Today’s national average price of gas represents an 18 percent savings compared to the 2014 high of $3.70 per gallon, which was reached on April 28.
Continuing unrest in Iraq and geopolitical tensions in Eastern Europe have taken a backseat to an emerging belief by many market watchers that global supply – including significantly higher oil production in the United States – is outpacing global demand growth. This assessment has helped sink West Texas Intermediate (WTI) crude oil prices to near $80 per barrel for the first time since June 2012 and has fueled speculation of how the Organization of Petroleum Exporting Countries (OPEC) will respond to the falling price of crude. OPEC is scheduled to convene on November 27 in Vienna to discuss global demand and the impact of increased production by non-OPEC countries. At the close of formal trading on Friday, WTI settled at $80.54 per barrel, down nearly 50-cents on the week.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories rose 2.1 million barrels to 379.7 million barrels. Gasoline stocks saw a 1.2 million barrel drop to 203.1 million barrels. Gasoline demand was little changed, adding 31,000 barrels per day (bpd) to the previous number to reach 8.867 million bpd.
“The steep decline in gas prices has been welcome news for motorists, especially as the national average drops below the $3.00 per gallon threshold,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Declining gas prices have helped to make driving less expensive for the vast majority of Americans who use their car every day. Many drivers are spending $10-$20 less to fill up the cars on every trip to the gas station compared to what they paid during the summer driving season.”
The Week Ahead
AAA anticipates gasoline prices will continue to drop in the weeks ahead, but it is possible that prices in many areas will begin to stabilize. Unless there are unexpected developments, gasoline should remain at this relatively inexpensive level this winter due to lower demand and typical seasonal trends. By spring, higher gas prices may return due to refinery maintenance, increased demand and a return to summer-blend gasoline.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
| 11/2/14 | Week Ago
10/26/14 |
Year Ago
11/2/13 |
|
| National | $2.99 | $3.05 | $3.27 |
| Virginia | $2.77 | $2.83 | $3.11 |
| Charlottesville | $2.84 | $2.90 | $3.06 |
| Norfolk Area | $2.80 | $2.87 | $3.12 |
| Richmond | $2.66 | $2.72 | $3.06 |
| Roanoke | $2.72 | $2.81 | $3.02 |
| Crude Oil | $80.54
per barrel (at Friday’s close, 10/31/14) |
$81.01
per barrel (Friday 10/24/14 close) |
$96.38
per barrel (10/31/13) |
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Chris Graham
