Crude oil prices reach six-year low

(March 24, 2015) WASHINGTON — The price of West Texas Intermediate crude oil reached a six-year low this past week, keeping downward pressure on the national price of gasoline. This downward pressure has, at least temporarily, offset potential price gains from robust demand, regional refinery maintenance and the seasonal transition to more expensive summer-blend gasoline, according to the AAA.

Today’s national average price for regular unleaded gasoline is $2.42 per gallon. Consumers are paying fractions of a penny less than one week ago, 14 cents more than one month ago and continue to save more than $1 dollar per gallon ($1.10) in comparison to this same date last year. The national average has now fallen for 13 of the past 16 days.

Despite steady gasoline production following a number of regional refinery issues, drivers on the West Coast continue to pay some of the nation’s highest averages for retail gasoline. Warmer temperatures in the region are credited with driving increased demand, and with ExxonMobil’s Los Angeles-area refinery and Tesoro’s Martinez refinery in the San Francisco Bay Area both running at reduced rates, supply has been unable to keep pace with growing demand.

For the fourth consecutive week California ($3.27) remains the nation’s most expensive state for gasoline, followed by Hawaii ($3.15), Alaska ($2.92), Nevada ($2.82) and Oregon ($2.79). South Carolina ($2.11), Tennessee ($2.15) and Alabama ($2.16) are the least expensive markets in the country for retail gasoline.

Consumers in 38 states are experiencing week-over-week savings at the pump, with the largest price drops seen in California (-10 cents), Minnesota (-8 cents) and Maine (-7 cents). The movements in price were relatively small in the majority of these states (- 3 cents or less), with the average price falling by a nickel or more in only six states. 

On the other end of the spectrum, the price has moved higher in 12 states and Washington, D.C. Motorists in six states are paying  an extra nickel or more per gallon, with the biggest jumps in price seen in the Midwestern states of Illinois (+27 cents), Michigan (+24 cents) and Indiana (+17 cents). Dramatic price swings are unfortunately nothing new for Midwest drivers who have seen frequent price volatility in recent years. This most recent increase has been keyed by issues at two major regional refineries: BP’s refinery in Whiting, Ind. and ExxonMobil’s refinery in Joliet, Ill.

The majority of drivers are paying more at the pump compared to one month ago. With the exception of Tennessee (+2 cents), pump prices have moved higher in 48 states and Washington, D.C. by a nickel or more per gallon month-over-month. Consumers in 30 states are paying premiums of a dime or more per gallon, versus one month ago , with the largest increases occurring in Utah (+50 cents), Idaho (+50 cents) and California (+37 cents). Delaware (-2 cents) and Georgia (-1 cent) are the only two states to buck this trend by posting monthly savings in the price at the pump.

Year-over-year price comparisons continue to reflect an overall savings for motorists. The price at the pump is discounted in every state and Washington, D.C., with the majority of states (41) and Washington, D.C. posting savings of $1 or more per gallon. Retail prices are down by more than $1.25 in three states: Colorado (-$1.38), Indiana (-$1.29) and Connecticut (-$1.27).

Global crude prices continued to tumble with reports of growing supply and the strengthening U.S. dollar. The likelihood of a possible nuclear deal between the West and Iran also has the potential to bring more oil to the global market. Additionally, comments by Saudi Arabia’s oil minister yesterday indicated that the Organization of the Petroleum Exporting Countries (OPEC) would not cut oil production to increase global oil prices, instead electing to let the market self-correct.

The domestic oil market in the U.S is facing similar oversupply dynamics and concerns that rising U.S. production could outpace storage capacity is contributing to lower prices. WTI fell to its lowest level since the 2009 Great Recession this past week, although prices did recover some of those losses to end the week. At the close of Friday’s formal trading on the NYMEX, WTI settled up $1.76 at $45.72 per barrel.

Source: AAA