AAA reported Monday that the average price of gas is at $2.86 per gallon, however, California is still the most expensive with an average of $4.07.
Gas prices are declining slowly but steadily across the country, pushing the national average down three cents on the week to $2.86. Today’s average is four cents cheaper than last month and the same price as one year ago. In fact, 25 states have gas price averages that are just a nickel or less expensive than this time last year.
Gas prices are decreasing despite the Energy Information Administration’s (EIA) latest reports which show an increase in demand to summer-like levels and a decrease in gasoline stocks. The move to cheaper gas prices indicates that demand and supply are potentially leveling out.
“This is the first time in three months gas prices have shown consistent signs of declining,” said Jeanette Casselano, AAA spokesperson. “However, there are many factors that could quickly push up prices in the coming weeks, including the impact of Chinese tariffs, weather, a major draw in gasoline stock levels, a spike in demand or the volume of Memorial Day weekend travel. Pump price movements this week will indicate if motorists will continue to see cheaper gas prices or if this was just a one-week fad.”
Motorists in the West Coast region are paying the highest pump prices in the nation, with all seven states landing on the nation’s top 10 most expensive list. California ($4.07) and Hawaii ($3.63) are the most expensive markets. Washington ($3.53), Nevada ($3.49), Alaska ($3.44), Oregon ($3.42) and Arizona ($3.15) follow. Prices in the region have seen modest increases and decreases on the week, with California (-2 cents) seeing the largest decline and Alaska (+3 cents) seeing the largest increase.
The EIA’s recent weekly report for the week ending on May 3 showed that West Coast gasoline stocks fell again by approximately 400,000 bbl from the previous week and now sit at 27.1 million bbl. The West Coast may see continued price volatility and shrinking gasoline stocks this week, which will likely lead to more increases at the pump due to ongoing refinery maintenance that pushed prices over $4/gal in April.
Oil market dynamics
At the close of Friday’s formal trading session on the NYMEX, WTI decreased four cents to settle at $61.66. On the week, crude prices have moved lower because of global concerns around trade negotiations between the U.S. and China. This plus reports that two Saudi oil tankers were attacked in the Strait of Hormuz are likely to keep prices volatile this week. In related news, this week’s EIA petroleum status report revealed that crude stocks fell by 4 million bbl to 466.6 million bbl last week. While the new level is 32.8 million bbl lower than the level at this time in spring 2018, the step back is a reversal from the previous week that saw crude inventories climb by 10 million bbl. Contributing to the recent reduction in total domestic crude inventories was a slight reduction in domestic crude production to 12.2 million b/d and a drop in crude imports from 7.4 million b/d to 6.7 million b/d. The reduction in crude inventories occurred despite crude exports falling last week from 2.6 million b/d to 2.3 million b/d. In related news, Baker Hughes, Inc. reported that the U.S. lost two oil rigs last week, bringing the country’s total to 805. When compared to this time in 2018, there are 39 fewer rigs now.