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The West Coast Still has the Most Expensive Gas in the NationSalem-News.com Business
Gas Prices Continue to Recover from Hurricanes
(PORTLAND, Ore.) - Prices at the pump continue to edge lower as production ramps up after a severe hurricane season.
For the week, the national average for regular unleaded slips a penny to $2.46 a gallon while the Oregon average also dips a penny to $2.75.
The national average has fallen 21 cents since its year-to-date high of $2.67 and the Oregon average has lost 17 cents since its year-to-date high of $2.92. Both averages peaked in the wake of Hurricane Harvey in mid-September.
“Although retail gas prices have been ticking down, they’re still above last year’s prices and will likely remain more expensive than 2016 as we approach the holiday travel season,” says Marie Dodds, public affairs director for AAA Oregon/Idaho.
The national average is currently 23 cents per gallon more and the Oregon average is 21 cents more than a year ago.
Oregon is one of 33 states and the District of Columbia where pump prices have declined in the last week. The largest declines are in Georgia and Texas where pump prices decreased by a nickel. The largest weekly increases are in Indiana (+10 cents) and Delaware (+8 cents).
Oregon is one of 43 states and the District of Columbia where gas prices have fallen in the last month. The largest monthly decreases are in Georgia (-29 cents) and South Carolina (-26 cents).
The national average is 12 cents less and the Oregon average is 13 cents less than a month ago. The largest monthly increases are in Indiana (+19 cents) and Michigan (+15 cents).
The West Coast still has the most expensive gas prices in the nation. Hawaii tops the list followed by California and Alaska. These three states all have averages at or above $3 a gallon. Washington and Oregon round out the top five. Oregon is fifth most expensive for the 17th week in a row.
The refinery utilization rate in the region remains a concern after this week’s Energy Information Administration (EIA) report found that the utilization rate fell seven percent for the week ending on October 13.
A lower utilization rate means that less crude oil is being processed to make refined products like gasoline. However, gasoline stocks are still above the five year average, which has helped to keep prices stable in the region.
Next week’s West Coast refinery utilization could come under further downward pressure, due to a fire at Chevron’s 290,500-b/d El Segundo, Calif., refinery on Oct. 17. Chevron has not provided updates on the status of the refinery.
On a separate note, drivers in California are likely to see prices at the pump increase next week if the state gas tax increase is implemented as expected on November 1.
The California tax rate for gasoline will increase 12cts/gal, from 29.7cts/gal to 41.7cts/gal. In addition, a storage tax will be imposed on all gasoline and diesel retailers, wholesalers and suppliers holding 1,000 gallons or more of tax-paid gasoline.
The nation’s cheapest markets are Missouri ($2.20) and Arkansas ($2.21). For the 13th week in a row, no states have an average below $2.
Oil Market Dynamics
Crude oil has been trading above $50 per barrel due to a number of factors putting upward pressure on prices. Last week’s EIA report noted a drop in crude inventories by 5.7 million barrels.
The decrease is likely due to crude exports increasing to 1.8 million barrels per day, according to EIA. Moreover, as expected, crude oil demand in the U.S. is down by 1 million b/d from last year, while total crude inputs at U.S. refineries dropped by 819,000 b/d.
Additionally, the U.S. rig count fell by 7, with the latest decline leaving 736 rigs active in the U.S., according to Baker Hughes, Inc. All of this data points toward weak domestic demand and decreased production of crude.
As domestic crude demand slows, the ability to sell crude outside of U.S. markets through exports has helped push the price higher.
As the market gets tighter, market observers will closely watch this week’s EIA report to see if the trends continue. Additionally, the upcoming OPEC meeting scheduled for November 30 in Vienna will also help the market assess the 2018 horizon for oil prices.
At the meeting, OPEC and non-OPEC members who have agreed to cut production through March 2018 will discuss the status of the agreement and may decide to take additional measures to deepen the agreement’s market impact.
At the close of Friday’s formal trading session on the NYMEX, WTI increased 18 cents to settle at $51.47. At the close of Monday’s session, WTI added six cents to settle at $51.90.
As of Oct 24 2017, crude is trading around $52, compared to $51 a week ago. Crude prices are up about one percent in the last month and are about $1 more per barrel than a year ago.
Diesel prices are holding fairly steady in many markets. For the week, the national average adds half a cent to $2.73 a gallon. Oregon’s average ticks down half a cent to $2.94.
A year ago the national average for diesel was $2.42 and the Oregon average was $2.56.
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