(WASHINGTON, January 20, 2015) U.S. motorists are paying the lowest average gas prices since April 2009, and the national average is likely to slide below $2 per gallon before the end of the month. The average price at the pump has dropped a record 117 consecutive days, for a total a savings of $1.29 per gallon during this stretch. The national average price for regular unleaded gasoline is $2.05 per gallon. Today’s price is six cents less than one week ago, 36 cents less than one month ago and $1.23 less than one year ago.
The average price at the pump is directly connected to the global price of crude oil, with crude costs accounting for more than half of the price of gasoline. Like pump prices, crude oil prices have also posted multi-year lows due to global supply outpacing demand, which has kept downward pressure on the price of crude and ultimately meant hefty discounts in retail gasoline for U.S. drivers. AAA expects the national average to remain below $3 per gallon in 2015, barring any major fluctuations in the global price of crude.
Drivers in 25 states are paying averages below $2 per gallon; up from 18 one week ago. For the second week in a row the midcontinent region features the nation’s least expensive states for retail gasoline, led by: Missouri ($1.76), Oklahoma ($1.80) and Kansas ($1.81). Hawaii ($3.31) remains the only state with an average above $3 per gallon, and is joined by Alaska ($2.82) and New York ($2.50) as the nation’s only states posting averages above $2.50 per gallon.
Retail averages across the country continued to march lower over the past seven days, with consumers in Wyoming (-13 cents), Connecticut (-12 cents) and Washington (-12 cents) experiencing the largest weekly savings. Averages are down in 48 states and Washington, D.C. week-over-week, with 38 states and Washington, D.C. registering savings of a nickel or more per gallon. The only states to buck this trend are the Midwestern states of Ohio (+2 cents) and Minnesota (+2 cents) where prices have risen slightly versus this time last week. Two-week comparisons follow the same trend, with only drivers in Ohio (+8 cents) paying more during this span. Motorists in Wyoming (-28 cents), Utah (-26 cents) and Connecticut (-24 cents) are seeing the largest discounts over this period, joined by 11 additional states where the price is reduced by 20 cents or more in comparison to two weeks ago. Drivers in 42 states and Washington, D.C. are saving at least a dime per gallon at the pump over this same span.
Monthly and yearly comparisons continue to reflect that U.S. motorists are universally experiencing savings at the pump. The largest month-over-month discounts are seen in the Mountain States of Utah (-60 cents), Wyoming (-56 cents) and Idaho (-54 cents), and a total of 47 states and Washington, D.C. are posting discounts of one quarter or more. Multi-month declines in the price of retail gasoline continue to dramatically impact yearly price comparisons. Drivers in 48 states and Washington, D.C. are saving more than $1 per gallon, while only the nation’s most expensive markets Hawaii (-69 cents) and Alaska (-83 cents) are outside of this trend. The steepest declines are in Illinois (-$1.37), Michigan (-$1.36) and Maine (-$1.34), which are joined by 15 other states registering savings of at least $1.25 per gallon versus one year ago.
While increased seasonal demand and maintenance at refineries may result in a typical 30-50-cent increase in pump prices this spring, a major global price recovery is unlikely to be the horizon, absent any major market disruptions or geopolitical events. These sustained lower prices would be a result of projected shifts in the balance between global oil supply and demand. This shift has been keyed by increased crude oil production in the United States and Canada and was accelerated by OPEC’s decision this fall to sustain production levels despite declines in the price of crude by electing to allow the market to self-regulate. By not continuing its traditional role as a market stabilizer and adjusting production to sustain higher prices, OPEC has put pressure on high-cost, oil-production countries like the United States and Canada. Both countries are reportedly starting to respond by easing domestic production forecasts and trimming operations and administrative costs. Crude prices are less than half of what they were six months ago, and sustained low prices will also continue to test the resiliency of countries that rely on oil revenue to fund government services.
The spread between Brent Crude and WTI continues to narrow, and stood at $1.48 a barrel at the close of formal trading on Friday. Less than one year ago WTI was trading at discount of $10 per barrel and the last time Brent fell below WTI was in 2010. WTI closed up $2.44 a barrel at $48.69 at the close of Friday’s formal trading on the NYMEX.