Gas Prices Continue to Drop as New Disruption Concerns Loom
WASHINGTON, D.C. — Stable global oil prices and modest domestic demand for fuel have led the average price at the pump to fall below $4 for the second consecutive week.
Today's national average is $3.90, which is 5 cents less than one week ago and 51 cents less than one month ago. However, the average is 74 cents more than one year ago, according to AAA.
"Drivers are now benefiting from gas prices that are $1.11 less than their peak in mid-June," said Andrew Gross, AAA spokesperson. "But now we need to keep an eye on the weather as hurricane season arrives. These storms can affect prices by disrupting oil production in the Gulf of Mexico and impacting large coastal refineries."
Data from the Energy Information Administration (EIA) shows that gas demand rose slightly from 9.12 million barrels per day to 9.35 million barrels per day last week, which is nearly identical to this time last year. Total domestic gasoline stocks decreased by nearly 5 million barrels to 215.7 million barrels.
Although gasoline demand has risen and supplies have tightened, easing oil prices have helped lower pump prices. If oil prices edge lower, drivers will likely continue to see falling pump prices, AAA noted.
The nation's top 10 largest weekly decreases were seen in Florida (12 cents), West Virginia (11 cents), Maine (11 cents), New Jersey (11 cents), Rhode Island (11 cents), Vermont (11 cents), Massachusetts (11 cents), Wyoming (10 cents), Connecticut (10 cents) and Mississippi (10 cents).
The nation's top 10 least expensive markets are Arkansas ($3.41), Mississippi ($3.43), Georgia ($3.43), Texas ($3.44), Tennessee ($3.44), Louisiana ($3.46), South Carolina ($3.46), Missouri ($3.47), Alabama ($3.47) and Kansas ($3.48).
At the close of the formal trading session on Aug. 19, West Texas Intermediate increased by 27 cents to settle at $90.77.
Although crude prices increased at the end of last week, EIA reported that total domestic crude supply decreased by 7 million barrels to 425 million barrels, and crude prices declined earlier in the week after U.S. housing data showed that homebuilding dropped to its lowest level in one and half years in July.
Higher mortgage rates, alongside the rising costs of materials, played a role in decreasing the demand for new housing. Lower housing demand also pushed oil demand expectations lower. If crude demand expectations remain low this week, crude prices could decline further, according to AAA.
A Message From Fuel Retailers
In his latest Viewpoint titled "Fuel Retailers' Message to President: Look in the Mirror," Convenience Store News Editorial Director Emeritus Don Longo wrote that gas station owners are not to blame for high gas prices, but they can help struggling consumers.
U.S. households are now spending the equivalent of $5,000 a year on gasoline, up from $2,800 a year ago, according to Yardeni Research.
One way retailers can help consumers is to use their loyalty programs to reward frequent customers with cents off a gallon of fuel, or tie in other in-store purchases to discounts on gas.
"As I write this, fuel prices appear to be moderating slightly. The Fed's move to increase interest rates also appears to be slowing inflation, which is good as long as it doesn't trigger another housing crash or recession," Longo wrote. "The convenience store industry has weathered worse times than this."