The global price of crude oil has fallen about 20% in the last month, putting downward pressure on gas prices. All 50 states are seeing decreases at the pumps, despite an increase in demand for gasoline. For the week, the national average for regular drops 14 cents to $4.66 a gallon. The Oregon average loses nine cents to $5.38.
“Crude oil reached a recent high of $122.11 per barrel on June 8, and today is trading at the recent low of $97 per barrel. The drop in price is driving lower pump prices, even with a rise in demand seen ahead of the robust July 4th travel period,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. AAA projected record car travel for the holiday, with 42 million Americans driving to their Independence Day destinations.
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.
Crude prices remain higher than a year ago due to tight global supplies. A year ago, crude was around $74 per barrel compared to $97 today.
Demand for gasoline in the U.S. rose ahead of the July 4th holiday from 8.92 million b/d to 9.41 million b/d. Total domestic gas stocks decreased by 2.5 million bbl. for the week ending July 1, according to the U.S. Energy Information Administration (EIA). Typically, an increase in demand and a decrease in supply would put upward pressure on pump prices; however, falling oil prices have contributed to lower pump prices.
Consumers can still enjoy a tasty AAA gas price–related treat courtesy of Krispy Kreme Doughnuts. Running every Wednesday through Labor Day, Krispy Kreme will lower the price of a dozen Original Glazed donuts to the national average that AAA reports each Monday. A dozen glazed doughnuts typically cost around $12. This Wednesday’s dozen should cost $4.68, not including sales tax, and is available only in shop, drive-thru, or online pickup.
Although the price of crude rose at the end of the week due to increased market optimism as markets rebounded, the price was still down nearly $4 per barrel from the previous week. For this week, crude prices continue to face strong headwinds as the market remains concerned that a potential recession will reduce demand for crude. If demand declines, crude prices will likely follow suit. Additionally, EIA reported that total domestic crude stocks increased by 8.2 million bbl to 423.8 million bbl, which is nearly 22 million bbl lower than the storage level one year ago.