The national and Oregon averages for gasoline continue to drop and are at their lowest prices since the spring. This marks the 13th consecutive week of declines, which are driven in part by lower crude oil prices. For the week, the national average for regular loses seven cents to $3.71 a gallon. The Oregon average dips four cents to $4.68.
The national average is at its lowest price since early March while the Oregon average is at its lowest price since early April. The national average reached its record high of $5.016 on June 14 while the Oregon average reached its record high of $5.548 on June 15. Both averages have been steadily declining since then. The major drivers of lower pump prices have been falling crude oil prices and several weeks of seasonally low demand for gas during the summer driving season.
“Less expensive oil usually translates into lower pump prices, and this trend has helped pump prices fall for 13 consecutive weeks. Barring unforeseen events, AAA expects gas prices to continue to drop with fall approaching,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “However, one factor that always has the potential to send oil and gas prices higher is a hurricane that impacts oil and gas infrastructure, production and transportation.”
Crude oil prices have tumbled from recent highs due to fears of economic slowdowns elsewhere around the globe. Crude reached a recent high of $122.11 per barrel on June 8, and ranged from about $94 to $110 per barrel in July. In August, crude prices ranged between about $86 and $97. So far in September, crude prices have been between about $81 and $89 per barrel.
Crude prices rose dramatically leading up to and in the first few months of Russia’s invasion of Ukraine. Russia is one of the world’s top oil producers and its involvement in a war causes market volatility, and sanctions imposed on Russia by the U.S. and other western nations resulted in tighter global oil supplies. Oil supplies were already tight around the world as demand for oil increased as pandemic restrictions eased. A year ago, crude was around $69 per barrel compared to $92 today.
Crude oil is the main ingredient in gasoline and diesel, so pump prices are impacted by crude prices on the global markets. On average, about 53% of what we pay for in a gallon of gasoline is for the price of crude oil, 12% is refining, 21% distribution and marketing, and 15% are taxes, according to the U.S. Energy Information Administration.
Demand for gasoline in the U.S. increased slightly from 8.59 million b/d to 8.73 million b/d last week. However, this is lower than last year at this time when demand was at 9.61 million b/d. Total domestic gasoline stocks rose by 300,000 bbl to 214.8 million bbl., according to the U.S. Energy Information Administration (EIA). Although gasoline demand has increased slightly, lower oil prices have led to falling pump prices. If gasoline demand begins to subside, as it typically does post-Labor Day with the end of summer driving, pump prices will likely continue to decrease.
The West Coast region continues to have the most expensive pump prices in the nation with all seven states in the top 10. This is typical for the West Coast as this region tends to consistently have fairly tight supplies, consuming about as much gasoline as is produced. In addition, this region is located relatively far from parts of the country where oil drilling, production and refining occurs, so transportation costs are higher. And environmental programs in this region add to the cost of production, storage and distribution.
Source: AAA