Gasoline Demand at Record Highs as Pump Prices Rise
The Energy Information Administration’s (EIA) latest data registers consumer gasoline demand at its highest level ever on record for the month of April, exceeding typical summer demand measurements.
As demand skyrockets, gas prices increased across the country on the week with five states seeing double-digit jumps. The national average ticked up a nickel to $2.76.
West Coast states primarily have the most expensive gas price averages ($3 and up). However, on the east coast, Pennsylvania ($2.97) is inching closer to that same threshold.
Today’s national gas price average at $2.76 is 17-cents more expensive than last month and 34-cents more expensive than last year at this time.
West Coast
Pump prices in the West Coast are among the most expensive in the country: Hawaii ($3.59), California ($3.58), Washington ($3.25), Alaska ($3.23), Nevada ($3.18), Oregon ($3.16) and Arizona ($2.79). On the week, all prices are up in each state. Arizona (+6 cents) and Nevada (+5 cents) lead the pack, while Hawaii and Oregon saw their averages for unleaded regular gasoline increase by two cents each.
The EIA’s latest report registers total gasoline inventories in the region down by 1 million bbl to 30.4 million bbl. This draw was the highest one-week decline in five weeks. West Coast gas stocks now sit 400,000 bbl higher than their level this time last year.
Great Lakes & Central
With this week’s increases, gas price averages in the region are as much as 35-cents more expensive than this time last year: Michigan (+35 cents), Indiana (+34 cents), Kentucky (+33 cents), Illinois (+33 cents) and Ohio (+30 cents). South Dakota (+22 cents) has the smallest year-over-year change in the region and the country.
On the week, Michigan and Ohio saw prices jump by a dime – the largest increases in gas price averages in the region and among the top 10 states in the country on the week. With a one-cent increase, Missouri saw the smallest increase in the region and the country. Overall, gas prices range from $2.87 in Michigan to $2.46 in Missouri.
South & Southeast
With an 11-cent increase, Floridians ($2.74) are seeing not only the largest pump price jump in the country and among the South and Southeast states, but the most expensive price in the region. At $2.72, New Mexico has the second highest gas price average in the region followed by Georgia ($2.66). All other states in the region have an average of $2.56 or less.
On the week, all states saw prices increase, just not double-digits like Florida: New Mexico (+6 cents), Louisiana (+5 cents), South Carolina (+5 cents), Alabama (+5 cents), Mississippi (+4 cents), Texas (+4 cents), Arkansas (+4 cents), Oklahoma (+3 cents) and Georgia (+1 cent).
Mid-Atlantic & Northeast
Six Mid-Atlantic and Northeast states land on this week’s top 10 list with the largest increases with three of them seeing prices jump double-digits: Rhode Island (+11 cents), Connecticut (+10 cents), New Jersey (+10 cents), Massachusetts (+8 cents), New Hampshire (+8 cents) and New York (+7 cents).
Pennsylvania’s ($2.97) gas price average is trending to hit $3 potentially this week. However, it will likely be the only state in the region to reach this mark. Most other states are still 11-cents or more cheaper than Pennsylvania: Connecticut ($2.89), New York ($2.88), Washington, D.C. ($2.87) and New Jersey ($2.82).
Rocky Mountain
For the first time since summer 2015, Idaho ($3.05) and Utah ($3.02) have seen gas prices exceed the $3 mark, landing both states on the top 10 list with the most expensive gas price average. This week, gas price increases varied across the region: Utah (+8 cents), Idaho (+6 cents), Montana (+4 cents), Wyoming (+3 cents) and Colorado (+2 cents). Even with the increase, Wyoming’s ($2.59) average is 46-cents cheaper than the most expensive state in the region.
Market Dynamics
At the close of Friday’s formal trading session on the NYMEX, WTI increased nine cents to settle at $68.38, which is the second highest close for WTI since Dec. 1, 2014, according to AAA.
The market saw increased volatility on Friday morning due to President Trump’s tweet that criticized OPEC’s efforts to restrict global crude supply and raise the price per barrel, but later in the day, crude prices rebounded to the highs they experienced earlier in the week, according to AAA. The jump in price per barrel occurred after Wednesday’s EIA weekly report revealed that crude inventories across the U.S. dropped by a combined 1.1 million bbl. They now sit at 427.6 million bbl, nearly 105 million bbl lower than their level in mid-April 2017. If EIA’s report this week reveals another inventory draw, crude prices are likely to continue climbing.
The year-over-year decline in oil inventories is a result of OPEC’s agreement with large non-OPEC producers to reduce crude production by 1.8 million b/d which was put into place in January 2017. The agreement is supposed to remain in effect until the end of 2018; However, last week Russian Energy Minister Alexander Novak said that producers in the agreement may begin easing output curbs sooner because the agreement has cleared out the glut of crude that the producers aimed to reduce.
Saudi Arabia, a leading member of the cartel, is likely to push back on any efforts to end the production reduction agreement prior to the end of the year because WTI prices could reach $80-$100 by that time. Representatives from both countries are likely to discuss the matter at OPEC’s upcoming meeting in Vienna, Austria on June 20 and 21, according to AAA.
In related news, Baker Hughes reported that the U.S. gained five active oil rigs last week, bringing the total to 820. The total is up 132 rigs when compared to the rig count at this time last year.
