High Supply, Low Demand Push Gas Prices Down Again
CARS.COM — Motorists in many parts of the country continued to see lower pump prices the past week as the supply of gasoline grew at the same time demand was dropping because of reduced driving during the winter. The national average for regular gas was $2.26 a gallon, the AAA Daily Fuel Gauge Report said Thursday — 2 cents lower than a week ago and 11 cents lower than a month ago.
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Motorists in the Great Lakes area saw the biggest decreases, with Ohio’s average for regular falling 9 cents a gallon to $2.02 and Indiana’s by 10 cents to $2.04. Ohio had the lowest statewide average for regular, and Indiana was tied for second with South Carolina.
The slow drop in pump prices over the past month comes despite an agreement by the Organization of Petroleum Exporting Countries and other oil-producing countries to reduce oil production in a bid to raise global prices for crude. AAA said in a statement that “increased U.S. production and low demand has led to a leveling out of prices over the last couple of weeks.” AAA noted that a report from the Energy Information Administration showed demand for gas fell 6 percent in January from a year ago and was the lowest for the start of a year since 2012.
Oil prices gained $10 a barrel after OPEC announced plans for the production cut, but U.S. oil has hovered between $51 and $55 for several weeks. It was trading at just under $53 early Thursday, down about $1 from a week ago. The EIA said U.S. oil inventories are above the five-year average for this time of year and gasoline stocks are near the top of the five-year average.
With the ample supply and low demand, average prices for premium gas and diesel fuel also have retreated the past month. Premium fell 8 cents a gallon to $2.54 and diesel fell 2 cents to $2.51. Normally, diesel fuel gets more expensive during the winter because some of the heavy oil used to make it is diverted to home heating oil.
A year ago, though, the national average for regular was $1.73, and for premium and diesel it was $2.01, so motorists now are paying 50 to 53 cents more a gallon, on average, no matter which fuel they use. Prices bottomed out at $1.70 in mid-February last year after a steady decline that lasted for months. The EIA expects regular gas will rise to a monthly average of $2.33 a gallon in March and average $2.39 for the calendar year.
Though prices fell the past week in many states, they rose on the West Coast. AAA said refineries there are beginning seasonal maintenance that temporarily reduces production and pinches the supply. Hawaii had the highest statewide average for regular at $3.10, followed by California, $2.83; Alaska, $2.76; and Washington, $2.73. Prices rose by 1 to 3 cents a gallon in those states the past week.
