Gas Prices Rise on Higher Crude Oil Costs

The national average price of gas has increased about seven cents per gallon over the past week due to sharply rising crude oil costs. Domestic crude oil prices last week reached the highest levels of 2015 as supplies built more slowly than anticipated. Despite the increase, consumers continue to benefit from substantially lower gas prices compared to recent years, with today’s national average of $2.46 per gallon representing the least expensive average for this date since 2009 ($2.06).

West Texas Intermediate crude oil prices settled at a 2015 high of $56.71 a barrel last Thursday as the latest EIA report showed that oil supplies increased at the slowest levels since the beginning of the year. The market also weighed potential geopolitical concerns in the Middle East and a weakening dollar. Domestic oil prices are more than $10 per barrel higher than a month ago, which has contributed to higher gas prices.

Planned and unplanned refinery problems also continue to affect the market, and may continue to impact price heading into the summer driving season. These events can have lingering regional impacts, as has been the case on the West Coast where retail prices continue to be among the highest in the nation. This comes despite reports last week that California gasoline production is at a four-month high. While trending higher, the state’s numbers still reflect reduced production at the ExxonMobil refinery in Torrance, Calif., which reduced production following a February 18 explosion. The refinery is not scheduled to complete its repair of damaged equipment until July, so regional prices may remain stubbornly high and sensitive to further production issues until that facility is back to full strength.

Locally, South Jersey drivers saw an increase of 15 cents per gallon of unleaded gas last week, as prices vaulted from $2.14 per gallon to $2.29. This price represents an increase of 13 cents more than one month ago ($2.16), but is still $1.15 per gallon less than one year ago ($3.46). Overall, New Jersey’s 14-cents-per-gallon increase last week was the largest jump of any state in the country.

California ($3.15) continues to lead the market posting the nation’s highest retail average for gasoline, and is followed by Hawaii ($3.07), Alaska ($2.98), Nevada ($2.80) and Washington ($2.75). Drivers in South Carolina ($2.21), Mississippi ($2.23) and Alabama ($2.24) are paying the lowest averages at the pump.

The average price for regular unleaded gasoline has climbed higher in 49 states and Washington, D.C. week-over-week. Thirty-six states have seen average prices rise by a nickel or more per gallon, and drivers in eight states are paying a dime or more per gallon one week ago. The largest increases have been in the Northeast, led by New Jersey (+14 cents), Connecticut (+13 cents), Massachusetts (+12 cents) and New Hampshire (+11 cents). Hawaii (-3 cents), consistently one of the nation’s most expensive markets, is the lone state to buck this trend as motorists experience a slight weekly savings at the pump.

Monthly comparisons show that consumers in the majority of states (37 and Washington, D.C.) are paying more to refuel their vehicles, although the size of the increase varies. Pump prices are up by a nickel or more per gallon in 23 states and Washington D.C., and drivers in seven states are paying a dime or more per gallon. Utah (+17 cents), Kentucky (+17 cents), New Jersey (+13 cents) and Delaware (+12 cents) lead the market, registering the largest month-over-month increases. On the other end of the spectrum, the price has fallen in 13 states versus one month ago, with the largest savings in California (-13 cents), Oregon (-9 cents) and Hawaii (-8 cents).

Year-over-year, the average price at the pump remains sharply discounted across the country. Retail averages are down nationwide, and 46 states and Washington, D.C. are posting savings of $1.00 or more per gallon. Consumers in 15 states and Washington, D.C. are saving $1.25 or more per gallon at the pump, led by: Indiana ($1.36), Michigan ($1.33), Kentucky ($1.32) and Georgia ($1.31).

Global oil prices continue to reflect volatility and industry stakeholders remain divided over where supply and demand fundamentals will send prices. Attention is focused on high-cost production countries like the U.S., where new production has been a key contributor to the sharply lower price of crude. With the price of West Texas Intermediate crude oil nearly fifty percent lower than the same month last year, more expensive production sources face pressure to remain economically viable in a dramatically different pricing environment.

At the close of Friday’s formal trading on the NYMEX WTI settled 97 cents lower at $55.74 per barrel.