The unexpected announcement from OPEC+ that it would cut oil production starting in May has helped push gas prices higher. Other factors behind climbing pump prices include an increase in demand for gas in the U.S. and a drop in gasoline stocks. For the week, the national average for regular unleaded jumps a dime to $3.61 a gallon. The Oregon average gains six cents to $3.99.
“Oil markets have had more than a week to digest the news from OPEC+. The announcement sent crude oil prices surging above $80 a barrel, although prices have struggled to stay above that mark,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “Still, the cost of oil accounts for more than 50% of what we pay at the pump, so drivers may not catch a break at the pump any time soon.”
On Sunday, April 2, the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, known collectively as OPEC+, announced a voluntary agreement to slash their output by just over 1 million b/d through the end of 2023. The cut is planned to start in early May. The move caused oil prices to spike, popping over the $80 per barrel mark. This puts upward pressure on pump prices when they were already rising due to the switch to summer-blend fuel and higher demand during the summer driving season.
Crude oil prices shot up above $80 per barrel on Monday, April 3 and remained above $80 last week. These were the highest closing prices since March 6. Crude oil continues to trade around $81 today compared to $81 a week ago and $94 a year ago. In March, West Texas Intermediate ranged between about $64 and $81 per barrel. In February, WTI ranged between about $73 and $80 per barrel. In January, WTI ranged between about $73 and $82 bbl. Crude reached recent highs of $123.70 on March 8, 2022, shortly after the Russian invasion of Ukraine, and $122.11 per barrel on June 8, 2022. The all-time high for WTI crude oil is $147.27 in July 2008.
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 56% of what we pay for in a gallon of gasoline is for the price of crude oil, 20% is refining, 11% distribution and marketing, and 14% are taxes, according to the U.S. Energy Information Administration.
Another factor putting upward pressure on pump prices this time of year is the seasonal switch to summer-blend fuel. California has an April 1 deadline to switch to summer-blend fuel, while the federally mandated deadline is May 1. The West Coast region often sees prices climb earlier than other parts of the country because of that earlier California deadline. More info on summer- and winter-blend gasoline can be found at the EPA website.
Demand for gasoline in the U.S. demand increased slightly from 9.15 to 9.3 million b/d for the week ending March 31. This compares to 8.56 million b/d a year ago. Meanwhile, total domestic gasoline stocks decreased substantially by 4.1 million bbl to 222.6 million bbl. Increased demand amid tighter supply has contributed to pushing pump prices higher. If demand continues to rise, pump prices will likely follow suit.
Oregon is one of 47 states and the District of Columbia with higher prices now than a week ago. Ohio (+24 cents) has the largest weekly jump. Utah (-3 cents) has the largest week-over-week decline. The average in Idaho is flat.
California ($4.89) has the most expensive gas in the nation for the sixth week in a row. Hawaii ($4.78) is second, Arizona ($4.42) is third, Washington ($4.40) is fourth, and Nevada ($4.24) is fifth. These are the only five states with averages at or above $4 a gallon. This week 45 states and the District of Columbia have averages in the $3-range. No states have averages in the $2 range this week, same as a week ago.
The cheapest gas in the nation is in Mississippi ($3.14) and Arkansas ($3.19). For the 117th week in a row, no state has an average below $2 a gallon.
The difference between the most expensive and least expensive states is $1.75 this week, compared to $1.82 a week ago.
Oregon is one of 41 states and the District of Columbia with higher prices now than a month ago. The national average is 13 cents more and the Oregon average is nine cents more than a month ago. Arizona (+47 cents) has the largest monthly jump. Colorado (-42 cents) has the largest monthly decline. The averages in Alaska and Maine are flat month-over-month.
All 50 states and the District of Columbia have lower prices now than a year ago. The national average is 51 cents less and the Oregon average is 67 cents less than a year ago. California (-88 cents) has the largest yearly drop. Arizona (-19 cents) has the smallest. A year ago, pump prices were rising rapidly after the start of the Russian invasion of Ukraine.
The West Coast region continues to have the most expensive pump prices in the nation with all seven states in the top 10. It’s typical for the West Coast to have six or seven states in the top 10 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.
As mentioned above, California has the most expensive gas in the nation for the sixth week in a row. Hawaii Arizona, Washington, Nevada, and Oregon round out the top six. Alaska is eighth. Oregon is sixth for the ninth week in a row.
For the week, the national average dips a penny to $4.20 a gallon. The record high is $5.816 set on June 19, 2022. The Oregon average slips two cents to $4.61. The record high is $6.47 set on July 3, 2022. A year ago the national average for diesel was $5.04 and the Oregon average was $5.39.