Ahead of the switch over to cheaper winter-blended fuel on Monday (September 15), the national average price for regular unleaded gasoline was $3.41 per gallon Friday, down three cents from the previous week. Friday’s average price is also six cents lower than one month ago and 14 cents lower than year ago prices. The national average has remained under $3.50 per gallon for 40 consecutive days (through 9/12).
The national average price for retail gasoline historically declines in the weeks after Labor Day, due to the end of the summer driving season and ample supply. September also marks the start of refineries beginning their yearly transition to producing a winter-blend of gasoline. This blend is cheaper to make because it does not need to meet emissions requirements that are in place in many areas to prevent pollution when temperatures are warmer. Motorists usually enjoy cost savings during this period; however, geopolitical instability, hurricanes or events that disrupt production could still cause temporary spikes in regional prices in the coming months.
Global markets have kept a wary eye on geopolitical unrest, particularly in Ukraine and Iraq. However, these developments have had little impact on supply and subsequently the retail price of gasoline. News last week of a possible ceasefire between Russia and Ukraine put further downward pressure on oil prices. Also driving the commodity’s downward momentum is cooling global demand, combined with continuing growth in U.S. production that partly offsets worries about supply disruptions amid turmoil surrounding the Middle East and Russia. Crude oil settled at $92.27, down $1 from last week.
The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories fell by 970,000 barrels to 358.6 million barrels. Gasoline stocks rose 2.4 million barrels to 212.4 million barrels. Gasoline demand fell almost 900,000 bpd to 8.611 million bpd last week. The last time gasoline demand was that low was during the week ending April 11, 2014. However, the latest level is about even with a year ago, as is the current four-week average for gasoline demand (8.992 million bpd currently versus 8.983 million bpd a year ago).
“The good news for motorists is that gasoline prices typically fall after Labor Day, as the end of the summer driving season reduces demand and the nation stockpiles oil,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “September also marks the start of refineries beginning their yearly transition to producing cheaper winter blends of gasoline. We expect retail prices to inch downward in the coming weeks. However, AAA warns that geopolitical instability, hurricanes or events that disrupt production could still cause temporary spikes in prices 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. In its monthly Short-Term Energy Outlook (STEO), the EIA projects U.S. regular gasoline retail prices will continue to decline to an average of $3.18 per gallon in December, 12 cents lower than projected in last month’s STEO. EIA expects U.S. regular gasoline retail prices, which averaged $3.51/gal in 2013, to average $3.46/gal in 2014 and $3.41/gal in 2015, 4 cents lower and 6 cents lower than last month’s STEO, respectively.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
| 9/14/14 | Week Ago
9/7/14 |
Year Ago
9/14/13 |
|
| National | $3.40 | $3.44 | $3.53 |
| Virginia | $3.15 | $3.18 | $3.30 |
| Charlottesville | $3.12 | $3.14 | $3.26 |
| Norfolk Area | $3.18 | $3.21 | $3.31 |
| Richmond | $3.07 | $3.11 | $3.25 |
| Roanoke | $3.09 | $3.09 | $3.22 |
| Crude Oil | $92.27
per barrel (at Friday’s close, 9/12/14) |
$93.29
per barrel (Friday 9/5/14 close) |
$108.60
per barrel (9/12/2013) |
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Chris Graham
