(GasBuddy) Average gasoline prices advanced across much of the country in the last week, with the national average rising nearly 4 cents per gallon to $2.53 per gallon as oil hit its highest level since 2014.
“With oil prices rallying to their highest level since 2014, it’s no surprise that gasoline prices continue to show frustrating strength for this time of year,” said Patrick DeHaan, head of petroleum analysis for GasBuddy. “While winter is usually a time for modest declines at the pump, this year has seen anything but. While two years ago areas of the country flirted with sub-$1 gas prices, we now see most areas more than double that. One bright spot however, is that gasoline production remains very strong at a time of year when it tends to be weak, and that could open the door for some larger discounts in the weeks ahead as refiners begin to move winter gasoline out of inventories to prepare for the transition to cleaner burning gasoline. The window is relatively small and closes shortly after Valentines Day, so don’t expect much improvement before the annual spring surge begins.”
48 of the nation’s 50 states saw average gasoline prices rise during the last week, while only Hawaii and Massachusetts saw prices fall fractions of a penny. The nation’s steepest increases occurred in the Great Lakes, as gasoline prices remain volatile in the region and susceptible to “price cycling”, a phenomenon that leads prices to plummet for long periods before spiking every few weeks. The upward trend missed few states primarily because it was led by oil prices that have rallied to their highest level since December 2014 on declining U.S. oil inventories, concerns of a sharp drop in oil production from Venezuela due to their economic tailspin, concerns of sanctions placed back on Iran and overall lower production from OPEC.
According to the Energy Information Administration (EIA), U.S. oil inventories now stand nearly 64 million barrels below their year ago level, boosted by strong demand so far in 2018. Just two weeks into the New Year, the amount of products being supplied to the market is nearly 5% higher than a year ago, likely driven by cold temperatures that have been seen across much of the country. What has been unusual, however, is that refineries have input near record amounts of crude oil for a time of year that demand is typically lower. The EIA reported that refineries used 95.3% of their operable capacity in the last week, leading gasoline inventories to surge 4.1 million barrels, but remain under their year ago level. Demand for gasoline remains strong, yet as refiners look to warmer months ahead, it is likely some areas will see “clearance sales” for winter-spec gasoline as the transition to cleaner burning counterparts begins.
Looking state-by-state, the largest weekly changes in average gas prices were seen in: Michigan (+12 cents), Iowa (+9 cents), Kentucky (+8 cents), Indiana (+8 cents), Illinois (+8 cents), Kansas (+7 cents), Georgia (+7 cents) Oklahoma (+7 cents), Minnesota (+7 cents) and Tennessee (+6 cents).
States with the lowest average gasoline prices: Missouri ($2.26), Alabama ($2.28), Mississippi ($2.28), Texas ($2.28), Arkansas ($2.28), South Carolina ($2.29), Oklahoma ($2.30), Louisiana ($2.31), Tennessee ($2.33) and Kansas ($2.35).
States with the highest average gasoline prices: Hawaii ($3.30), California ($3.18), Alaska ($3.09), Washington ($2.90), Pennsylvania ($2.80), Oregon ($2.78), Nevada ($2.74), Michigan ($2.72), Connecticut ($2.69) and New York ($2.67).
With oil prices still holding near recent highs of $64 per barrel (WTI) and nearly $70 for Brent, little broad relief is expected at the gas pump across the country. There may be isolated pockets of price declines, but this winter bears little resemblance to the tradition that sees gasoline prices declining into mid-February.