Gas Prices Continue Fast Decline

Pump prices have been falling every day for more than two weeks with Oregon and other West Coast states seeing the biggest weekly drops in the nation. Lower crude oil prices and fewer drivers than usual fueling up are helping to drive the decreases. For the week, the national average for regular drops 10 cents to $3.78 a gallon. The Oregon average tumbles 24 cents to $5.05. This is the third-largest weekly drop for a state in the nation, only behind Alaska (-36 cents) and California (-29 cents).

The Oregon average came within a penny of reaching a new record high this month when it got to $5.54 a gallon on October 9. It has decreased every day since then. The national average climbed to $3.92 on October 11 and has fallen every day since then. Refinery outages in the West Coast region and the resulting drop in supplies helped fuel the dramatic pump price increases in this area.

Both the national and Oregon averages hit record highs in mid-June, then declined for 14 consecutive weeks before rising again starting in late September. 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.

“Crude oil prices have been tempered by fears of a global recession along with the Biden Administration’s plan to continue tapping the Strategic Petroleum Reserve into December. This should help take pressure off pump prices, bringing some relief to drivers and their wallets,” says Marie Dodds, public affairs director for AAA Oregon/Idaho.

Crude oil prices have stayed below $90 per barrel since October 10. 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. In September, crude prices ranged between about $76 and $88 per barrel. So far in October, crude has ranged between $82 and $92 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 $73 per barrel compared to $85 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 8.28 million b/d to 8.68 million b/d for the week ending October 14. This is about 1 million b/d less than a year ago. Total domestic gasoline stocks decreased marginally from 209.5 million bbl to 209.4 million bbl. If demand remains low and oil prices don’t spike, pump prices will likely keep falling.

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.

Refinery issues in California in September and earlier this month exacerbated the situation, creating extremely tight supplies and causing pump prices in this region to skyrocket.

Source: AAA

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