The Week

November began with the national gas price average dropping below the $3.00 per gallon mark (on Nov. 1) for the first time since Dec. 22, 2010, ending its longest streak ever (1,409 days) above that price.  The national gas price average continued its downward trend this week, dropping to $2.95 on Friday.  Friday’s gas price is five cents below one week ago, 33 cents below one month ago and 27 cents below year ago prices.  The national average has now dropped for 43 straight days (through Friday) for a total of 39 (through $2.95) cents per gallon.  The national average has declined 73 cents per gallon since June 27 ($3.68).

Abundant global oil production — particularly the substantial increases to U.S. production — continues to outweigh any concerns of possible supply disruptions due to geopolitical instability.  This assessment has been validated by the price of crude dropping by approximately 25 percent since June at the same time as violence in Iraq and tensions in Eastern Europe have continued to grab headlines.  Market participants continue to speculate about how the Organization of Petroleum Exporting Countries (OPEC) will respond to falling prices, and whether the cartel will agree to cut or sustain production. 

OPEC admitted this week that demand for their crude has fallen, another blast to a market that has been dropping since mid-summer and confirms what many have been saying for weeks.  Oil supplies are growing faster than demand with faint hope that demand will rebuild to compensate for the additional supplies.  At the close of formal trading on Friday, crude oil settled at $78.43 per barrel.

The Energy Information Administration (EIA) noted in its weekly report that crude oil inventories rose 500,000 barrels to 380.2 million barrels.  Plenty of crude oil is available as domestic output inches closer to 9 million barrels per day (bpd), a level expected to hit before the page is turned on 2014.  Gasoline stocks saw a 1.4 million barrel drop to 201.8 million barrels.  A solid jump in gasoline demand was seen for the week ending Oct. 31. Gasoline demand came in at 9.162 million b/d, up by almost 300,000 b/d from the previous week. But a look at last year shows that gasoline demand last week was a little more than 100,000 b/d less than a year ago.

The Weekend

“National pump prices usually drop during the autumn season due to decreasing demand and the cost savings associated with producing winter-blend gasoline,” said Tracy Noble, spokesperson for AAA Mid-Atlantic.   “However, global oil prices have declined more than anticipated, as supply has outpaced demand, contributing to even greater savings at the pump for drivers. Barring an unexpected market-moving development this winter, motorists can expect to pay retail prices that are relatively low.  AAA predicts the national average could fall another 5-15 cents in the coming weeks, which could make for the cheapest Thanksgiving gas in half a decade.”

The Week Ahead

Gas prices may remain relatively low this winter and could continue to drop another 5-15 cents per gallon in the near term as gas stations catch up with the steep declines in the wholesale market. Nevertheless, the price of crude oil has stabilized and that may act as a brake on further significant gas price declines.  However, the national average price of gas could drop to $2.90 per gallon or lower depending on the price of crude oil.  More affordable gas prices should help drivers just in time for holiday travel and shopping.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

11/7/14

Week Ago

Year Ago

National

$2.95

$3.00

$3.22

New Jersey

$2.78

$2.83

$3.13

Trenton

$2.84

$2.89

$3.18

Cape May County

$2.72

$2.78

$3.13

Burlington County

$2.72

$2.77

$3.10

Middlesex, Somerset, Hunterdon

$2.76

$2.83

$3.14

Monmouth, Ocean Counties

$2.76

$2.81

$3.13

Crude Oil

$78.43 per barrel

$80.54 per barrel

$94.20 per barrel