U.S. gasoline demand hit its highest level at 9.93 million b/d, for the week ending June 14. It is the highest level ever recorded since the Energy Information Administration (EIA) began publishing data in 1991. Counterintuitively, as motorists drive demand to new heights, pump prices pushed even cheaper across the country on the week. This is due to the recent trend in cheaper crude pricing and because crude comprises roughly 60% of the costs people pay at the pump, drivers are seeing summer savings. When compared to this time last year, domestic crude prices are cheaper by approximately $12 per barrel. Today’s national average is $2.66, which is two cents less than last week and 18 cents less than a month and year ago.
“Filling-up at the pump this summer could mean savings as much as a quarter a gallon,” said Jeanette Casselano, AAA spokesperson. “Cheaper prices could entice motorists to travel more and even take some last minute road trips.”
At the end of last week, a massive fire took Philadelphia Energy Solution’s (PES) Philadelphia, the largest on the East Coast, offline, causing concern of what this could do to gas prices this summer. The incident will likely lead to reduced gasoline production at the refinery. However, gasoline from Canada, neighboring refineries, and the Colonial Pipeline are likely solutions to help backfill supply, meet demand and relieve any tightness in gasoline supplies as a result of reduced gasoline production at PES’ refinery and keep gas prices cheap throughout summer.
The nation’s top 10 largest monthly decreases are: Indiana (-30 cents), California (-26 cents), South Carolina (-24 cents), Michigan (-23 cents), Oklahoma (-21 cents), Arizona (-21 cents), Mississippi (-21 cents), Maryland(-21 cents), Nebraska (-21 cents) and Delaware (-20 cents).
The nation’s top 10 most expensive markets are: Mississippi ($2.24), South Carolina ($2.24), Alabama ($2.26), Louisiana ($2.26), Arkansas ($2.31), Oklahoma ($2.34), Tennessee ($2.35), Texas ($2.35), Missouri ($2.37) and Virginia ($2.40).
Mid-Atlantic and Northeast
On the week, state gas price averages are as much as three cents cheaper with Virginia, New Jersey, and Rhode Island seeing the largest declines. Following the fire at Philadelphia Energy Solution’s Philadelphia refinery on Friday, a few states have seen slight increases on the week, albeit less than a penny. This includes Pennsylvania and West Virginia. As the smoke continues to clear at the refinery, it would not be surprising to see gas prices in Pennsylvania and other surrounding states continue to inch up this week. Industry experts speculate that as much as 150,000 b/d will be lost, though for how long is unclear. The good news is that the price hikes are likely to be short-lived due to replacement gasoline supplies from neighboring refineries, imports and the Gulf Coast.
New York ($2.84) ranks as the 10th most expensive state average in the country. At the same price, Pennsylvania ranks 11th, followed by Connecticut ($2.82) as 12th.
For the week ending June 14, the Energy Information Administration (EIA) reports inventories fell for a second week, by 1.3 million bbl, to total 62.1 million bbl. With the PES facility at reduced levels combined with unplanned maintenance at United Refining’s Warren, Pennsylvania, we can expect gasoline stocks and regional refinery utilization to decline in upcoming EIA report’s reports with moderate impacts to gas prices in the region.
Great Lakes and Central States
After appearing on the top 10 largest weekly declines list last Monday, Michigan ($2.69) and Ohio’s ($2.55) gas price averages jumped seven and six cents respectively, and are they only states in the country to see average increase. All other Great Lakes and Central States saw gas prices decrease up to six cents on the week. State gas price averages in the region range from $2.44 to $2.80.
Gasoline stocks in the region saw a moderate increase, according to EIA data, bumping up to 48.9 million bbl as regional refinery utilization took a huge leap – up 6% to total 96%. Utilization in the Great Lakes and Central States has not been this high since early January of this year and will likely keep any price movements moderate for the majority of the region.
On the week, motorists are paying on average four cents less to fill-up: Utah (-5 cents), Idaho (-4 cents), Colorado (-4 cents), Montana (-3 cents) and Wyoming (-1 cent). Compared to a year and month ago, regional gas prices are up to 14 cents cheaper.
Motorists in the Rockies can expect to see gas prices continue to fall in the coming weeks with regional refinery utilization at nearly 100%. To boot, gasoline stocks already sit an extremely healthy level for this time of year at 7.6 million bbl, according to EIA data.
South and Southeast
Motorists in the South and Southeast are saving the most at the pump compared to last year with nine state averages sitting at 25 cents to 34 cents less per gallon to fill-up. Oklahoma is the exception at 22-cents less year-over-year. One the week, pump prices continued to push less expensive, dropping between one to 6 cents. Florida (-6 cents) saw the largest drop while these six states saw averages decline by three cents since last Monday: Alabama ($2.26), Arkansas ($2.31), New Mexico ($2.56), South Carolina ($2.24) and Texas ($2.35).
Gasoline inventories drew by 1 million bbl on the week, landing total stocks at 83.4 million bbl, one of the largest stock levels of the year. Stocks have the potential to draw further in the weeks ahead as the region may be tapped to help provide supply to the Mid-Atlantic and Northeast following last Friday’s fire at Philadelphia Energy Solution. However, this support is not likely to cause gas prices in the South and Southeast to increase.
Pump prices in the West Coast region are the highest in the nation, with all seven states landing on the top 10 most expensive list today. California ($3.75) and Hawaii ($3.63) are the most expensive markets. Washington ($3.37), Nevada ($3.35), Alaska ($3.30), Oregon ($3.24) and Arizona ($2.92) follow. Of note, all state averages in the region have decreased on the week, with Alaska (-8 cents) and California (-6 cents) seeing the largest declines.
The EIA’s recent report for the week ending on June 14, showed that West Coast gasoline stocks increased slightly by 200,000 bbl from the previous week and sit at 31 million bbl. The current level is approximately 200,000 bbl more than last year’s level at this time, which could help suppress any price spikes if there is a supply disruption or gas demand surges in the region this week.
Oil market dynamics
At the close of Friday’s formal trading session on the NYMEX, WTI increased by 36 cents to settle at $57.43. Crude prices climbed as tension rises in the Middle East. On Friday, it was reported that the U.S. was very close to executing a military strike against Iran as a result of the White House’s belief that Iran was responsible for shooting down a U.S. drone in the region, as well as last week’s alleged attack on two tankers in the Gulf of Oman. President Trump reportedly called off the strike minutes before it was to be engaged. Approximately 20% of global crude supplies flow through the Gulf of Oman. Moving into this week, if tensions between the U.S. and Iran escalate, the market will likely continue pushing global crude prices higher due to increased market fears that a military standoff between Iran and the U.S. could limit global supply and access to crude.
Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.