For the second consecutive week, the U.S. national average for a gallon of gasoline has slipped, falling to $2.30 per gallon according to GasBuddy. Overall, more states joined in on the falling gas prices, with 42 of the nation’s 50 states seeing average gasoline prices fall over the last week versus 36 states that partook in the previous weekly drop. The national average stands 46.3 cents higher than a year ago when prices averaged $1.84 per gallon.
The downward trend has developed not as crude oil prices have declined—they’ve held steady over $50 per barrel—but rather as gasoline inventories rise amidst anemic demand. According to the Energy Information Administration (EIA), gasoline inventories have risen by 19.3 million barrels in the last three weeks while demand has fallen to 8.37 million barrels per day, nearly 14% below peak summer demand.
Adding to the downward pressure in gasoline prices is that inventories overloaded with winter gasoline will soon need to be purged, making way for cleaner blends and ultimately summer gasoline over the next few months. Refiners move lower-spec winter gasoline out of the system by offering temporary discounts, which is why motorists should enjoy the drop while it lasts.
Of the 42 states seeing average prices decline in the last week, the biggest winners were motorists in:
- Ohio (-12.9 cents)
- Michigan (-11.6 cents)
- Illinois (-8.1 cents)
- Indiana (-8.0 cents)
- Kentucky (-6.3 cents).
And as citizens took to Washington for Inauguration Day and the Women’s March, gas prices in Washington, D.C. dropped 6.3 cents per gallon over the last week.
The seven states that saw gas prices rise were:
- Hawaii (+5.2 cents)
- Missouri (+1.9 cents)
- Utah (+1.8 cents)
- Montana (+1.2 cents)
- Louisiana (0.7 cents), Nebraska (0.5 cents)
- Nevada (+0.2 cents)
GasBuddy’s data showed that the nation’s cheapest gas can be found in South Carolina ($2.06 per gallon), while Oklahoma ($2.08) and Tennessee ($2.10) followed close behind. On the other end of the spectrum, Hawaii ($3.10), California ($2.80) and Washington ($2.74) saw the priciest gasoline.
Meanwhile, the gas price climate has continued to cool with 5.8% of U.S. gas stations selling under $2 per gallon, a rise from 1.8% a week ago, but a far cry from 80.3% a year ago.
While crude oil prices have been less of an influence at the pump, they remain in familiar territory, opening the week at $53 per barrel—in the $51-$54 range—where they’ve spent much of the last two months after OPEC announced oil production cuts. In the meanwhile, Saudi Arabia and Russia continue to weigh in on the cuts, suggesting they’ve stuck to the cuts even as U.S. shale production ramps back up. According to Baker Hughes, the total U.S. rig count stood at 694 last week, up 57 rigs (9%) versus a year ago, and 35 rigs more from the previous week (5%). In Canada, an even larger weekly gain was made where the rig count rose 9% in a week (27 rigs) to 342, or 92 rigs (37%) higher than a year ago. North America stands to gain from higher oil prices as producers, incentivized by higher prices, return to their fields.
For the week ahead, motorists may continue to see average prices falling across a majority of the country, while motorists in the Great Lakes may see gas prices rise, a function of the price cycling behavior GasBuddy has identified in the region. Motorists in Michigan are at highest odds to see a large, temporary rise, while motorists in Indiana, Ohio, Kentucky and Illinois may also see such a rise.