The national average price of gas has fallen for a record 106 days to $2.17 per gallon (Friday), every day since September 25, which is the lowest average since May 8, 2009. Friday’s national average price for regular unleaded gasoline dropped to $2.17 per gallon. The average price at the pump is six cents less than one week ago, 49 cents less than a month ago and $1.14 below the same date last year. Drivers closed out 2014 on a high note with households saving an average of approximately $115 on gasoline in comparison to 2013 due to relatively low prices at the pump. The average price for retail gasoline hit multi-year lows during the last few months of 2014 and is expected to continue to fall as we begin 2015.
The price of crude is continuing its downward slide due to excess supply and weak demand, and has fallen below $50 per barrel for the first time since April 2009. Global oil prices are expected to remain relatively low for the first half of 2015, which could put additional pressure on high-cost production countries like the United States. Rebel forces continue to disrupt supply from OPEC member country Libya, yet the level of global oversupply appears capable of easing concerns that might otherwise send prices higher due to production concerns. Sustained low prices for crude have the potential to impact domestic production, with both upstream and downstream companies reportedly beginning to reassess their plans moving forward. The global price of crude has lost more than half of its value since mid-2014. At the close of formal trading on Friday, crude oil settled at $48.36 per barrel, down nearly eight percent on the week and the lowest settlement since April 22, 2009.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories declined 3.1 million barrels to 382.4 million barrels. Gasoline inventories jumped 8.1 million barrels to 237.2 million barrels, the highest level to start a new year in the weekly database from the EIA that goes back to 1990. The next closest start was when there was just over 233 million bbl to start 2013, which incidentally saw a pretty significant spring rally in prices. In fact, total stocks are at the highest outright level since January 2011. Rather strong gasoline demand in December normally gives way to weak January demand when the Christmas shopping bills come due, and this move to 2015 was no different. Gasoline demand took a dive last week, dropping by 805,000 barrels per day (bpd) to 8.809 million bpd. Even with the sharp week-to-week decline, gasoline demand is the highest to start the new year since 2011.
“U.S. drivers ended 2014 on a high-note with gas prices plummeting over the last few months of the year,” said Martha M, Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “The lower gas price trend is likely to continue into 2015, with the year promising to provide much bigger savings to consumers as long as crude oil remains relatively cheap. It would not be surprising for U.S. consumers to save $50-$75 billion on gasoline in 2015 if prices remain low.”
The national average price of gas may drop another 10 cents per gallon during the next week or so as retail prices catch up with the steep declines in the cost of crude oil. Barring any significant fluctuations in the price of crude oil, the average price at the pump is likely to remain below $3.00 per gallon in 2015, although prices may see seasonal increases this spring as refineries undergo maintenance, or this summer as demand increases during the busy summer driving season.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
(at Friday’s close, 1/9/15)
(Friday 1/2/15 close)