Prices for gas continue to decline due to fears of a COVID-19 global economic slowdown pushing oil prices into the mid $60s per barrel, a price that was not seen since the beginning of August.
According to AAA, the other factor that helped ease price pressures was the choice made by OPEC along with its oil producer partners to not cut production.
The national average price for one gallon of gasoline plunged by 4 cents over the course of the week, to $3.35. For the average consumer, prices for gasoline were at their lowest since October 20.
“Consumers may be catching a break at the pump right now, but it’s not for a very good reason,” said Andrew Gross, AAA spokesperson. “A potential COVID-19 induced economic slowdown hurts everyone and could prompt OPEC to slash production if oil prices drop too low.”
On Thursday, OPEC and its allies, a group referred to as OPEC+, announced it would stick to its plan to boost production by 400,000 b/d in January. The move was likely in response to the Biden Administration’s call to increase supply to tame high fuel prices.
According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks rose by more than 4 million bbl to 215,422 million bbl last week. Meanwhile, gasoline demand dropped from 9.3 million b/d to 8.8 million b/d. The decrease in demand contributed to falling prices, while lower crude prices also put downward market pressure on pump prices.
Today’s national average of $3.35 is seven cents less than a month ago and $1.19 more than a year ago.
Quick Stats
The nation’s top 10 largest monthly decreases: Indiana (−21 cents), Michigan (−18 cents), Ohio (−17 cents), Washington, D.C. (−15 cents), Missouri (−14 cents), Texas (−13 cents), Iowa (−13 cents), Kansas (−12 cents), Oklahoma (−12 cents), and South Carolina (−12 cents).
The nation’s top 10 most expensive markets: California ($4.68), Hawaii ($4.34), Nevada ($3.91), Washington ($3.87), Oregon ($3.78), Arizona ($3.77), Alaska ($3.71), Idaho ($3.65), Utah ($3.62) and Pennsylvania ($3.57).
Oil Market Dynamics
At the close of last week’s formal trading session, WTI decreased 24 cents to settle at $66.26. Crude oil prices decreased last week due to uncertainty of the COVID-19 omicron variant’s impact on demand and the announcement that OPEC+ will ramp up production by 400,000 b/d in January. Additionally, EIA reported minimal draws on U.S. commercial crude oil inventories, which decreased by 900,000 bbl from the previous week to 433.1 million barrels. This week, crude oil prices could continue to fluctuate. Market watchers will keep a close eye on crude oil inventories and the impact that the omicron variant has on demand.
Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.
Isn’t it interesting how factors like global economic uncertainties and oil market fluctuations affect gas prices? Keeping an eye on pandemic developments and major oil producers’ decisions helps us make smarter fuel choices. Stay in the know to save on gas and stay on top of your expenses!