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09/07/2022

Pain at the Pump Continues to Ease

Multiple factors prompt gas prices to fall 31 cents over the last month.
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gas pumps fuel pumps

WASHINGTON, D.C. — Drivers continue to benefit from falling gas prices due to a variety of factors.

A combination of lower oil prices, modest domestic gasoline demand and a thus-far quiet hurricane season is driving prices at the fuel pump down as summer shifts into fall.

The national average for a gallon of gas fell 7 cents in the past week to $3.77 per gallon of regular gasoline, reported AAA.

"According to weather analysts, it's the first time in 25 years that a named Atlantic storm did not develop in August. That's the good news," said Andrew Gross, AAA spokesperson, "but we still have another month of peak hurricane season, and these storms can affect gas prices by disrupting oil production and refining."

Crude oil prices recently dropped on lackluster Chinese manufacturing output due to lower demand for goods and new COVID19 outbreaks in critical industrial cities, according to AAA. This is driving concerns that oil demand could fall in China, now the largest importer of crude oil in the world.

Recent data from the U.S. Energy Information Administration (EIA) shows that domestic gas demand increased slightly from 8.43 million barrels per day to 8.59 million barrels per day over the last week. However, this rate is nearly 1 million barrels per day lower than the last week of August 2021. Additionally, total domestic gasoline stocks decreased by 1.1 million barrels to 214.5 million barrels. Despite rising gasoline demand and tightening supply, lower oil prices led to falling pump prices.

If oil prices continue to decline, drivers will likely continue to see gas prices at the pump drop further, AAA predicted.

The current national average of $3.77 per gallon is 31 cents less than one month ago but 59 cents more than one year ago.

The top 10 largest weekly decreases in the United States occurred in Vermont (15 cents), Connecticut (14 cents), Rhode Island (14 cents), Pennsylvania (14 cents), Massachusetts (13 cents), Maine (13 cents), New York (12 cents), Delaware (12 cents), New Jersey (12 cents) and Maryland (12 cents).

The top 10 least expensive markets are currently Texas ($3.25 per gallon), Arkansas ($3.25), Mississippi ($3.26), Louisiana ($3.30), Georgia ($3.31), Oklahoma ($3.34), Tennessee ($3.36), Missouri ($3.36), Alabama ($3.37) and South Carolina ($3.39).

At the close of the formal trading session on Sept. 2, West Texas Intermediate increased by 26 cents to reach $86.87. Crude oil prices saw a slight increase at the end of the week due to the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, reducing production by 100,000 barrels for October. However, prices still declined most of the week amid market concerns that demand for crude oil will fall of economic growth slows or stalls due to a recession.

During the current week, crude oil prices may continue to drop if demand concerns persist. Additionally, the EIA's latest weekly report indicated that total commercial crude inventories decreased by 3.4 million barrels to 418.3 million barrels.