The US Energy Information Administration reports that at the beginning of this week, the US average retail price for regular gasoline was US$3.06 per gallon (gal), $.64/gal lower than the June average price and the lowest average price for any week since December 2010. Falling crude oil prices have been largely responsible for the decline in retail gasoline prices. Typical seasonal declines in gasoline crack spreads, the difference between the wholesale price of gasoline and the crude oil price, have also contributed to falling pump prices. Current market prices and conditions indicate that a US average retail price below the symbolic $3/gal mark is possible in the coming weeks.
EIA’s survey is consistent with survey results reported by AAA, which cited an average regular grade gasoline price on Monday of less than $3/gal at 55% of US stations. GasBuddy.com also reported early-week prices of just over $3/gal.
The spot price for North Sea Brent crude oil, which US petroleum product prices generally track, has fallen by $24 per barrel (bbl) from the 2014 monthly-average peak of $112/bbl in June. As of 24 October, the monthly average Brent spot price was $88/bbl. The $24/bbl decline in price equates to about $.57/gal.
Brent crude oil prices have declined because of a weakening outlook for global oil demand growth, the return to the market of previously disrupted Libyan crude oil production, and continued growth in US tight oil production. Brent prices are now the lowest they have been since late 2010, before violence in Libya and other areas in the Middle East and North Africa disrupted significant volumes of crude oil supply to the global market.
Although US average retail prices remain above $3/gal, the PADD 3 (Gulf Coast) average retail price is already well below that level, averaging $2.83/gal as of 27 October. Gasoline prices in different regions of the country vary, because of localized supply and demand conditions, differences in gasoline quality specifications, notably those in California, and state and local gasoline taxes. Retail prices on the Gulf Coast are often the lowest in the country because the region is home to about half of US refining capacity and produces much more gasoline than it consumes locally. The Gulf Coast also generally has low taxes on gasoline compared with other locations.
GASOLINE PRICES LOWEST SINCE 2010, DIESEL FUEL PRICES MOSTLY FALL
The US average price for regular gasoline fell six cents in the past week to $3.06 per gallon as of 27 October 2014, 24 cents lower than the same time last year and the lowest price since 27 December 2010. The West Coast price decreased ten cents to $3.32 per gallon, followed by the East Coast, which fell nine cents to $3.05 per gallon. The Gulf Coast was down eight cents to $2.83 per gallon, while the Rocky Mountain price decreased five cents to $3.20 per gallon. The Midwest price was down a penny to $3.02 per gallon.
The US average diesel fuel price fell two cents from last week to $3.64 per gallon, 24 cents lower than the same time last year. The West and East Coast prices each fell four cents, to $3.80 per gallon and $3.63 per gallon, respectively. The Gulf Coast price fell three cents to $3.56 per gallon, while the Rocky Mountain price declined two cents to $3.71 per gallon. The Midwest price increased half a cent to $3.61 per gallon.