BOSTON, Apr. 18, 2016 – Gasoline prices are up. Again. Across the U.S., the average price for a gallon of gasoline rose 6.8 cents per gallon in the last week to $2.12 per gallon, according to price-tracker GasBuddy which supplies data for wane.com’s Gas Gauge.
Much of the jump at the pump can be blamed on crude oil prices that rose sharply last week as traders bid oil prices higher, optimistic that a weekend meeting between some oil producing countries in Doha, Qatar would net an oil production freeze or cut. Gasoline prices continued the push higher, following oil, with 49 of 50 states seeing a weekly rise at the pump, with the lone exception being Hawaii, where prices fell three tenths of a penny.
Leading the surge at the pump last week was Kentucky, up 15 cents, Minnesota, up 14 cents, and Illinois, up 14 cents. A total of nine states saw average gas prices rise by more than a dime, among the fastest pace of increases in several weeks. While gasoline has risen, diesel prices have followed more slowly, and stand at an average of $2.11 per gallon, up just two cents in the last week. The average price for a gallon of diesel is now cheaper than gasoline, a trend GasBuddy expects will continue for much of the remainder of this year.
The U.S. national average gas price continues to lag its year ago level by 33 cents per gallon, saving motorists $130 million every day over what they spent last year. A total of 14 states still enjoy average gas prices under $2 per gallon: LA, MS, OK, SC, TX, AR, AL, MS, TN, NM, VA, KS, NJ and MT. On the more expensive sits CA, HI, NV, WA and PA, though a whopping fifty cents separates the fifth most expensive state to the most expensive state ($2.29 in Pennsylvania versus $2.79 in California).
Across the country, some 40% of gas stations still offer a price at or under $2 per gallon, far better than a year ago when 0% of the nation’s stations offered such a low price. In fact, just 14% of stations a year ago were selling at or under $2.50 per gallon.
On the horizon, however, is a likely slowdown in the pace of increases, thanks to the weekend meeting in Doha, Qatar. Traders believed that perhaps a cut or freeze would be implemented, curbing production. Neither happened, as bickering between Saudi Arabia and Iran continued. Saudi Arabia indicated it is open to a production freeze, but only if the Iranians would agree- something they’ve said they will not do as their exports ramp up after years of economic sanctions. As a result, the Saudis have said they will raise output sharply. With weekend meeting in Doha now behind us, oil markets face a reckoning: oil production remains much higher than demand, which has led global inventories to continue rising.
“Gasoline prices increased last week in 49 of 50 states, thanks to a sudden jump in the price of crude oil tied to speculation of a change or freeze in oil output at this weekend’s meeting in Doha, Qatar,” said Patrick DeHaan, senior petroleum analyst for GasBuddy. “At the conclusion of the talks over the weekend, no decision was made- not at all a surprise given the recent disagreements between major players Saudi Arabia and Iran. The lack of a clear vision to cut or even freeze crude oil production will likely lead to a sharp sell off in oil markets to start the week as global oil production continues to outpace demand. While typically we’re used to seeing gasoline prices racing higher in the spring, the direct impact of this weekend’s meeting could cause gasoline prices this week to reverse temporarily as oil markets react,” DeHaan said.