MIAMI -- Tumbling crude oil prices around the world have helped send the national retail average price for gasoline to its lowest mark since February 2009, reported AAA. Retail averages have fallen for 63 of the past 74 days, for a total savings of 34 cents per gallon, reaching the Jan. 20 price of $1.88 per gallon.
Gas prices are down seven cents per gallon on the week, which is the fastest pace gas prices have dropped since the middle of November.
Motorists typically enjoy falling gasoline prices in early winter due to decreased demand for gasoline, and that also is helping to push prices downwards. Despite recent declines, the national average price of gas is only 18 cents per gallon cheaper than a year ago since prices also were very low in early 2015.
The price of crude oil has dropped more than 70% compared to the June 2014 high ($107.26 per barrel), and expectations that both global and domestic supply will continue to outpace demand are helping drivers to save at the pumps. The rout in oil prices continued over the past week and crude oil settled below the $30 per barrel benchmark for the first time since 2003.
AAA previously estimated the annual average price of gas in 2016 will be $2.25 to $2.45 per gallon, although the sharp decline in oil costs since the year began has the potential to lead to even lower gas prices if global oversupply and economic concerns persist.
A total of 38 states are posting averages below $2 per gallon, and drivers in Oklahoma ($1.59), Missouri ($1.62) and Alabama ($1.65) are paying the nation’s lowest prices.
Gas prices are below the $1.75 benchmark in 17 states, which is seven states more than a week ago.
Retail averages in California ($2.75) continue to be the most expensive in the nation and are relatively high due to lingering refinery issues affecting supply in the region. The Golden State is followed by regional neighbors: Hawaii ($2.63), Alaska ($2.48), Nevada ($2.41) and Washington ($2.32).
Gas prices are down week-over-week in every state, with the largest drop during this span in the Midwest. Prices in this region are known to be volatile, and swings in production and distribution are generally reflected in the price at the pump. With refineries running smoothly and supply outpacing demand, motorists in Indiana (down 16 cents), Ohio (down 16 cents), Michigan (down 15 cents) and Kentucky (down 12 cents) are saving the most on the week.
Consumers in more than half of states (32) are saving at least a nickel per gallon over this same period.
With the exception of Alaska (up 9 cents) and California (up 4 cents), two of the nation’s most expensive markets, consumers nationwide are benefitting from monthly savings in the price of gasoline. Of the states posting discounts, pump prices are down by a nickel or more per gallon in every state and Washington, D.C., month-over-month, and averages in 39 states and Washington, D.C., are down by a dime or more per gallon over this same period.
The largest monthly savings are being enjoyed by motorists in: Montana (down 20 cents), Oklahoma (down 20 cents), Indiana (down 17 cents), Missouri (down 16 cents) and Illinois (down 16 cents).
Retail averages had tumbled dramatically as of January of last year, and as a result the comparative savings at the pump are narrowing. However, the majority of drivers continue to experience yearly savings. Prices are down in 45 states and Washington, D.C. on the year and motorists in a total of 39 states and Washington, D.C. are benefitting from double-digit savings. Hawaii (down 69 cents) is the only state posting a year-over-year savings of more than 50 cents per gallon. Drivers in five states are paying more than one year ago: California (up 25 cents), Idaho (up 20 cents), Nevada (up 16 cents), Washington (up 7 cents) and Utah (up 5 cents).
Although oil prices did tick higher briefly midweek, they were sent back lower by last week’s end reportedly due to the assessment that Iranian oil will reenter the market is being viewed as more of a reality. Lower-for-longer prices are also beginning to lead to speculation about what has been described as “collateral damage,” which is essentially the impact of lower oil prices on other assets and markets. Reports are surfacing about future prices and estimates of anticipated losses in production from non-OPEC countries.
Many expect the oil market to begin to rebalance in 2016, but a number of questions remain. Specifically, a central focus will be the impact of Iranian oil returning to market, and if any changes in global oil demand will be significant enough to help offset some of the current glut in supply.