The average gas price in Kentucky climbed 9 cents in the past week, putting it among the nation’s top 10 states for largest weekly increases. On the week, 28 states saw gas price averages increase by at least a nickel, pushing the national gas price average up 6 cents to land at $2.33. That is the largest one-week increase seen at the national level this year. In Lexington, the average gas price is now at $2.28, a 20 cent climb from a week ago.
“Motorists are seeing more expensive gas prices as a result of ongoing refinery problems coupled with crude oil prices hitting their highest level so far this year as global crude inventories tighten,” said Lori Weaver Hawkins, public and government affairs manager, AAA Blue Grass. “Inventories are likely to continue to tighten and keep gas prices higher through the end of the month.”
The latest Energy Information Administration (EIA) weekly report details demand dropping for a second week to total 8.6 million barrels per day. Frigid and severe winter weather has been a driving factor for declining demand and this week’s approaching storm from the Plains to the Northeast has the potential to drop demand further. Refinery problems and increasing exports have kept inventories at minimal builds. For the week ending Feb. 8, inventories increased only 408,000 barrels to total 258.3 million.
Today’s national gas price average is 9 cents more expensive than last month, but 19 cents cheaper than a year ago. In Kentucky, the average price is also 9 cents less than a month ago, but remains 13 cents lower than a year ago.
Gas Prices on the Rise Across Kentucky
Gas prices climbed across the commonwealth in the past week with some areas experiencing as much as a quarter jump at the pump. Most communities saw prices increase a dime or more. The exception was Louisville, which saw prices remain almost steady week over week.
Kentucky Average Gas Prices, Feb. 19
Refinery Maintenance, Tighter Inventories Spell Higher Prices in the Central U.S.
Gas prices are 4 to 16 cents more expensive on the week across the Great Lakes and Central states mostly due to ongoing refinery maintenance and inventories tightening. Eleven states in the region have averages that are a nickel or more expensive since last week: Michigan (+16 cents), Minnesota (+11 cents), Kansas (+10 cents), Iowa (+9 cents), Kentucky (+9 cents), Nebraska (+8 cents), Missouri (+8 cents), Wisconsin (+7 cents), Ohio (+6 cents), Indiana (+5 cents) and Illinois (+5 cents).
While gas prices are less expensive than a year ago, they are more expensive than last month for most Great Lakes and Central states. In fact, four states land on the top five chart for all states in the country with the largest month-over-month difference: Michigan (+35 cents), Ohio (+25 cents), Wisconsin (+22 cents) and Indiana (+20 cents).
Regional inventories drew down by 3.2 million barrels, according to EIA latest reports, to total at 58.6 million barrels. This is the second lowest inventory level of the year. Regional refinery utilization is also down nearly 9 percent. The large draw and drop in utilization are pushing gas prices higher.
Quick Stats on the Nation
· The nation’s top 10 least expensive markets are: Alabama ($2.04), Mississippi ($2.04), Missouri ($2.07), Arkansas ($2.07), Louisiana ($2.07), South Carolina ($2.08), Texas ($2.09), Colorado ($2.09), Kansas ($2.11) and Virginia ($2.11).
· The nation’s top 10 largest weekly increases are: Michigan (+16 cents), Oklahoma (+12 cents), Minnesota (+11 cents), Texas (+11 cents), Kansas (+10 cents), Arkansas (+10 cents), Delaware (+10 cents), Maryland (+9 cents), Iowa (+9 cents) and Kentucky (+9 cents).
Oil Market Dynamics
At the close of Friday’s formal trading session on the NYMEX, WTI increased $1.18 to settle at $55.59 – the highest price point of the year. Crude prices continued their ascent last week, due to growing belief that global supply is tightening. OPEC’s 1.2 million b/d production cut agreement, which is in effect for the first six months of 2019, has helped to rebalance the market. Also, an increasing reduction in crude exports from Venezuela due to U.S.-imposed sanctions has contributed to market observers believing the market will grow tighter in the coming weeks.
These concerns will likely bolster crude prices even more this week, and market observers will look to this week’s EIA report to see if there are additional indicators of market tightening. As crude prices increase, American motorists can expect pump prices to follow suit, since approximately 50 percent of the cost consumers pay at the pump is due to the cost per barrel of crude oil.
Additionally, EIA reported that total domestic crude inventories grew by 3.6 million bbl to 450.8 million bbl last week. High crude production in the U.S., which held steady at a staggering 11.9 million b/d last week, contributed to the growth in crude stocks around the country and is expected to help meet global crude demand as supply challenges loom.
In related news, Baker Hughes Inc. reported that the U.S. added three oilrigs last week, bringing the total to 857. When compared to last year at this time, there are 59 more rigs this year.
AAA offers these tips to motorists to save at the pump:
• If your vehicle’s engine does not require premium or mid-grade fuel, don’t buy it. Using anything other than regular grade is simply a waste of money.
• Don’t top off your gas tank. Stop filling after the automatic nozzle shuts off the second time.
• If you have to replace a gas cap, make sure it is the right one for your car. An ill-fitting cap will increase emissions and trigger the “check engine” light.
• Keep track of gas mileage. If you notice a sudden decrease in fuel economy, have your vehicle checked by a technician to ensure it is operating properly.
• Check for proper tire pressure, which can fluctuate greatly with changing temperatures.
Learn more at AAA.com/mobile.
