The Week

The national gas price average continues to plummet, dropping to $3.00 per gallon Friday for regular grade gasoline, which is seven cents less than one week ago, 33 cents less than one month ago and 28 cents below one year ago. Friday’s average marks the lowest average since December 23, 2010.  The national average has now dropped for 36 consecutive days for a total of 34 cents per gallon.

Gas prices typically decline this time of year, but have fallen more swiftly than typical due to the sharply declining price of crude oil. The cost of crude oil accounts for approximately two-thirds of the price consumers pay for gasoline, which means, barring any other factors, gas prices continue to fall as long as crude oil prices decline. Today’s national average price of gas represents an 18 percent savings compared to the 2014 high of $3.70 per gallon, which was reached on April 28.

Continuing unrest in Iraq and geopolitical tensions in Eastern Europe have taken a backseat to an emerging belief by many market watchers that global supply – including significantly higher oil production in the United States – is outpacing global demand growth. This assessment has helped sink West Texas Intermediate (WTI) crude oil prices to near $80 per barrel for the first time since June 2012 and has fueled speculation of how the Organization of Petroleum Exporting Countries (OPEC) will respond to the falling price of crude. OPEC is scheduled to convene on November 27 in Vienna to discuss global demand and the impact of increased production by non-OPEC countries. At the close of formal trading on Friday, crude oil settled at $80.68 per barrel.

The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories rose 2.1 million barrels to 379.7 million barrels.  Gasoline stocks saw a 1.2 million barrel drop to 203.1 million barrels.  Gasoline demand was little changed, adding 31,000 barrels per day (bpd) to the previous number to reach 8.867 million bpd.

The Weekend

“The steep decline in gas prices has been welcome news for motorists and has helped to make driving less expensive for the vast majority of Americans who use their car every day,” said  Tracy Noble, spokesperson for AAA Mid-Atlantic.  “Many motorists are spending $10-$20 less to fill up the cars on every trip to the gas station compared to what they paid during the summer driving season.”

The Week Ahead

AAA anticipates gasoline prices will continue to drop in the weeks ahead, but it is possible that prices in many areas will begin to stabilize. Unless there are unexpected developments, gasoline should remain at this relatively inexpensive level this winter due to lower demand and typical seasonal trends. By spring, higher gas prices may return due to refinery maintenance, increased demand and a return to summer-blend gasoline.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

10/31/14

Week Ago

Year Ago

National

$3.00

$3.07

$3.28

New Jersey

$2.83

$2.90

$3.16

Trenton

$2.89

$2.93

$3.21

Cape May County

$2.78

$2.86

$3.17

Burlington County

$2.77

$2.84

$3.14

Middlesex, Somerset, Hunterdon

$2.83

$2.90

$3.16

Monmouth, Ocean Counties

$2.81

$2.88

$3.16

Crude Oil

$80.68 per barrel

$81.25 per barrel

$96.38 per barrel