As Americans begin to look towards Memorial Day weekend and the kick-off to the summer driving season, gasoline prices are in a full retreat with the national average declining 4.2 cents in the last week to $2.34 per gallon, according to price-tracker GasBuddy.
The decline at the pump has been far-reaching with 49 of the nation’s 50 states in on the slump at the pump, led by a 9.5 cent decline in Ohio’s average gas price, followed closely by Michigan (down 9 cents) and Indiana (down 8.8 cents). The only state that saw prices rise was Alaska, by 1.1 cents per gallon.
The decline has led to a surge in a number of stations selling at $2 per gallon or less in the last week: 5,177 stations now offer such a price point versus 2,148 a week ago, an increase of 141% in a week’s time.
The bulk of the decline in gasoline prices can be thanked on a recent plunge in crude oil prices as concern over weak demand and high supply has offset sentiment about last November’s OPEC production cuts. The number of U.S. rigs drilling stands at 877, a rise of 7 in the last week, but 462 more rigs- 111% more- than a year ago. While OPEC cut oil production, U.S. and Canadian oil companies have filled the gap, leaving OPEC to lose market share. How long the charade continues is up to OPEC, who will decide in a few weeks whether or not to extend production cuts. Gasoline demand has also been somewhat weak thus far in 2017, with the Energy Information Administration reporting demand is 3.5% lower so far versus 2016.
Also putting downward pressure on gasoline prices is high refinery utilization, suggesting that maintenance season is behind us.
Stateside, falling gasoline prices have pushed some states closer to seeing a sub-$2 per gallon average price. South Carolina motorists enjoy the nation’s cheapest average gallon: $2.03, while Oklahoma ($2.04), Tennessee ($2.09), Mississippi ($2.10) and Louisiana ($2.12) follow.
The nation’s priciest gallon is found in Hawaii, where prices are close to slipping back under $3 per gallon at $3.02. California followed at $2.96 with Washington ($2.85), Alaska ($2.76) and Oregon ($2.74) rounding out the most expensive states.
While odds appear to be stacked in the favor of another week of falling gasoline prices across much of the nation in the week ahead, the looming OPEC decision to extend production cuts could push markets soon in either direction depending on the outcome. A surprise cut in oil production could cause prices decreases to ebb while if cut leading Saudi Arabia throws in the towel, prices could drop further.