Gas Prices Dip 3 Cents Amid Higher Supply, Lower Demand
CARS.COM — A midwinter decline in gasoline prices continued at a slow pace the past week, and the national average for regular fell by 3 cents to $2.33 a gallon, according to the AAA Daily Fuel Gauge Report. AAA reported that the average has fallen 10 days in a row, usually by fractions of a penny, but warned that the decline may soon end.
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“The slight decrease in retail prices can be attributed to less demand and adequate supply, but this downward dip may only be temporary,” AAA said in a statement, citing lower oil production by members of the Organization of Petroleum Exporting Countries as cause for concern.
OPEC production fell by less than 1 percent in December, but that was before an agreement among members and other major oil-producing countries took effect Jan. 1, reducing production by greater amounts in a bid to boost oil prices. U.S. oil prices jumped more than $11 to nearly $55 a barrel in December after OPEC announced plans for the production cut but have fallen back since and were trading at less than $52 early Thursday. Oil accounts for nearly half the cost of gasoline, and pump prices rise and fall with oil prices.
GasBuddy.com analyst Patrick DeHaan also cautioned that the recent declines are likely to end by mid-February or sooner as refineries shut down for seasonal maintenance and begin switching from winter blends of gasoline to summer blends that are more expensive to produce.
“The long transition to summer gasoline becomes a pinch point, leading to gas prices that will mostly trend higher for two to three months,” DeHaan said in a blog post.
Even with the 3-cent decline in the national average the past week, AAA said regular gas was 9 cents higher than a month ago and 45 cents higher than a year ago, when oil cost less than $35 a barrel. Premium gas, at $2.83 a gallon, and diesel fuel, at $2.53, also were 9 cents higher than a month ago. Premium is 43 cents more than a year ago and diesel is 39 cents more.
The biggest declines the past week were in the Great Lakes area, where prices tend to be more volatile than in other parts of the country. Average prices for regular fell by 11 cents in Michigan and 12 cents in Indiana and Ohio. Over the past two weeks, prices have dropped by 19 cents in Michigan to $2.35 a gallon and 21 cents in Indiana to $2.15. If history is a guide, though, prices are likely to rebound soon in the Great Lakes area.
In most states, average prices rose or fell by a penny or two the past week, with a majority seeing slight declines. The lowest prices were in the South, with Mississippi and Missouri at $2.14, Alabama and Tennessee at $2.13 and South Carolina at $2.10.
The highest prices were in states along the Pacific Ocean, topped by Hawaii at $3.07 and followed by California, $2.81; Alaska, $2.78; and Washington, $2.75. Average prices for regular were more than $2.50 in New York, Oregon, Pennsylvania and the District of Columbia.
