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May 9, 2016 | Fuel
By Nadia Anderson Manager, Federal Relations Monday, May 9, 2016
The national average price of gas declined slightly on the week, and it is possible that prices have begun to stabilize has refineries increase production to meet record-high demand. Today’s average price of $2.21 per gallon represents an increase of 17 cents per gallon on the month, and prices have moved higher for 23 of the past 31 days. Despite this recent trend higher, retail averages are down by one cent per gallon on the week, and drivers continue to benefit from year-over-year discounts, saving 45 cents per gallon on the year.
Locally, South Jersey drivers are paying slightly more at the pump this week compared to last week. Today’s average price of $2.04 for a gallon of unleaded gas is one cent higher than last week ($2.03). Today’s price is also 21 cents more than one month ago ($1.83). However, the price is still 44 cents per gallon than one year ago ($2.48).
According to the latest data from the U.S. EIA, total U.S. gasoline supplies are at their highest levels to start May on record. Historically gasoline demand increases leading into the summer driving season, and this year so far is no different. However, lower gas prices are contributing to drivers taking to the roads at record levels and the 2016 summer driving season is expected to rival 2007 when gasoline demand hit an all-time high.
Gasoline demand reached its fourth-highest weekly estimate for 2016 and remains well above year-over-year levels. Although the market is well supplied with product, the notable growth in gasoline demand could cause pump prices to become volatile leading into the summer driving season. Refineries nationwide are ramping up production, which should help increase supplies in regional markets. This is good news for the average driver, because if supply can keep pace with demand, averages should remain relatively low and drivers should continue to benefit from comparative savings at the pump.
Quick Stats
East Coast
Gasoline inventories are up on the East Coast and the return of a few refineries to production in the region are also contributing to the overall expected growth in U.S. refining production. The regional market is well supplied with product, though three of the top ten most expensive markets are located in the region: Pennsylvania ($2.40), Washington, D.C. ($2.39) and New York ($2.38). On the whole, gas prices in the region have been steady, moving by +/-2 cents per gallon over the past week.
Oil Market Dynamics
The possibility of disrupted supply from the Canadian Oil Sands influenced the global price of crude oil over the past week; however, expectations of reduced supply were largely overshadowed by news of increased production out of Iran and other OPEC and non-OPEC nations. Iran reportedly reached pre-sanction production levels, and as production countries continue to fight for market share, the global oil market is likely to remain oversupplied.
Global oil prices rallied over the weekend due to news that the longtime Saudi Arabian oil minister would be replaced. This sentiment was short-lived as reports quickly surfaced that the world’s largest exporter would maintain its current course and attempt to defend its market share by sustaining production levels. Oversupply is likely to continue to characterize the global oil market and attention will remain focused on output from non-OPEC countries and any other factors that may help bring supply and demand into balance.
At the close of Friday’s formal trading session on the NYMEX, WTI was up 34 cents and settled at $44.66 per barrel.
Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile