Gas Prices Continue to Decline Despite Stock Deficit

Gas prices are as much as $0.06 cheaper in some states across the country this week, which has pushed the national gas price average a penny cheaper to $2.85. That average could have been even lower had a handful of Midwest states not seen prices increase by more than a nickel due to ongoing refinery maintenance, according to AAA.

“Gas prices are getting cheaper for the majority of motorists despite the fact that U.S. gasoline stocks sit at a 7-million-barrel deficit year-over-year. Crude oil prices have remained relatively stable the past few months, which is one reason helping gas prices be cheaper than last year at this time,” said Jeanette Casselano, AAA spokesperson. “Today, motorists can find gas for $2.50 or less at nearly half of all gas stations in the country.”

The national average gas price this month is $0.07 cents cheaper year-over-year.

National gas price highlights include:

• The top-10 largest weekly changes across the country are in Ohio (up $0.11), Michigan (up $0.07), Florida (down $0.07), Illinois (down $0.05), North Carolina (down $0.04), South Carolina (down $0.04), Delaware (down $0.04), Mississippi (down $0.04), Indiana (up $0.03) and Georgia (down $0.03).
• The top-10 least expensive markets are Louisiana ($2.45), South Carolina ($2.45), Alabama ($2.45), Mississippi ($2.45), Arkansas ($2.50), Tennessee ($2.54), Missouri ($2.54), Oklahoma ($2.56), Texas ($2.57) and Kansas ($2.58).

Great Lakes and Central States

Amid refinery maintenance, gasoline stocks dropped by 700,000 barrel, squeezing total levels to 49.4 million barrel, according to the Energy Information Administration (EIA). This is not only the lowest level of the year, but a stock level historically only recorded in the second half of the year for the region and certainly not a level seen going into peak driving season, according to AAA. The draw was one of the reasons three states in the region were among the top-five weekly increases in gas prices in the country, including Ohio, Michigan, and Indiana. These jumps mostly wiped up any decreases seen last week for these three states.

All other states in the Great Lakes and Central States saw pump prices decline by as much as a nickel on the week.

Illinois ($2.97) remains the most expensive price in the region followed by Indiana ($2.84) and Michigan ($2.83). Missouri ($2.54) and Kansas ($2.58) carry the cheapest.

As previously reported, the region averages stock levels around 52 million barrel ahead of Memorial Day. With levels facing a 2.6 million barrel deficit, motorists should not be surprised if gas prices inch up this month, especially as refinery utilization remains under 90 percent, according to AAA.

Mid-Atlantic and Northeast

Gas prices are currently cheaper across the Mid-Atlantic and Northeast states ranging from $3 in Pennsylvania to $2.54 in Tennessee. With a $0.04 decrease, Delaware and North Carolina saw the largest decreases in the region and rank among the top-10 weekly changes in the country.

Looking at prices compared to last month, the region has states appearing on both the top-10 list for the smallest and largest monthly changes in the country. The states with the largest changes in the last month are Rhode Island (up $0.12) and Massachusetts (up $0.11). While the states with the smallest changes in pump prices are Maryland (no change), Virginia (up $0.01), Washington, D.C. (no change) and West Virginia (no change). However, some states have prices cheaper month-over-month: Tennessee (down $0.06) and North Carolina (down $0.04 cents).

Motorists paid less to fill up this past week as gasoline stocks drew by 700,000 barrel, but that might not be the case for long. The EIA reports total stocks measure at 59.9 million barrel, which is a 3.3-million-barrel deficit compared to last year at this time. A bump in refinery utilization could help to plump up stock levels to keep gas prices stable, according to AAA.

South and Southeast

South and Southeast states are seeing some of the largest decreases in the country on the week with Florida down $0.07, South Carolina down$0.04, Mississippi down $0.04 and Georgia down $0.03. With cheaper gas prices trending across the in the region, motorists can find gas for $2.50 or less at 49 percent of gas stations in South and Southeast states.

Compared to a month ago, gas prices are cheaper in all 10 South and Southeast states.

Pump prices declined as gasoline stocks built by 1.5 million barrel in the region, which was the only in the country to see an increase. At 82.9 million barrel and a 94-percent regional refinery utilization, reported by the EIA, motorists in the South and Southeast can expect gas prices to trend stable if not cheaper in the week ahead, according to AAA; however, a small spike ahead of Memorial Day Weekend is not out of the question.

Rocky Mountain

While gas prices are more expensive on the week in Utah and Idaho, for the first time in weeks, none of these states landed on the top-10 list for largest weekly changes in the country. More so, gas prices increased by only $0.02 in Utah, Idaho and Wyoming, while Colorado ($2.84) and Montana ($2.86) prices held steady since last Monday. However, with a state average of $3.20 in Idaho and $3.19 in Utah, these states carry among the top-10 pump prices in the country.

Gasoline stocks in the Rockies region drew by 400,000 barrel to total levels at 6.3 million bbl. The draw might have been larger had regional refinery utilization not jumped by 10 percent to 93 percent. The increase in utilization helped to keep prices mostly stable despite gasoline stock levels not sitting this low since September 2017, according to AAA. Stock levels and utilization will be major factors determining the movement of gas prices in coming weeks, which is likely to trend more expensive.

West Coast

Pump prices in the West Coast region are the highest in the nation, with all seven states landing on the nation’s top 10 most expensive list today. California ($4.04) and Hawaii ($3.64) are the most expensive markets. Washington ($3.54), Nevada ($3.49), Alaska ($3.46), Oregon ($3.43) and Arizona ($3.14) follow. Prices in the region have seen mostly modest increases on the week, with Alaska (up $0.02) seeing the largest jump and California (down $0.03) having the largest decline.

The EIA’s recent weekly report for the week ending on May 10 showed that West Coast gasoline stocks fell again by approximately 700,000 barrel from the previous week and now sit at 26.4 million barrel, according to AAA. The current level is 3.3 million barrel less than last year’s level at this time. The West Coast may see continued price volatility and shrinking gasoline stocks this week, increasing pump prices for motorists in the region.

Oil Market Dynamics

At the close of the formal trading session on May 19 on the NYMEX, WTI dropped 11 cents to settle at $62.76. Crude prices increased due to rising global tensions that saw alleged attacks on oil tankers in the Strait of Hormuz and on a Saudi Arabian oil pipeline. The tension only increased supply concerns that have been building due to the U.S. taking a tough line on sanctions against Iran and unrest in Venezuela and Libya leading to disruptions of supplies from those countries, according to AAA.

Crude prices will likely continue to ascend this week after OPEC and its partners met over the weekend to discuss compliance with the group’s 1.2 million b/d production reduction agreement that has been in place since January 2019. The group will formally decide if it will keep the agreement in place beyond June at next month’s meeting, but after this weekend’s compliance meeting, Saudi Energy Minister Khalid al-Falih said that there was consensus among participants to continue to drive down crude inventories for the remainder of the year.

In related news, EIA’s weekly petroleum report revealed that total domestic crude inventories increased by 5.4 million barrel to 472 million barrel. The current level is 39.7 million barrel more than last year at this time, according to AAA. Moreover, Baker Hughes Inc. reported that the U.S. lost three rigs last week, bringing the total to 802, which is 42 fewer rigs than last year at this time.