With the busy summer driving season behind us, motorists are beginning to see some relief at the pump, as the national gas price average dropped by a penny on the week to $3.17. However, recovery from Hurricane Ida, more storms in the forecast and falling gasoline stock levels could slow the downward trend that is typical through the fall.
Here in Kentucky, the gas price dropped 4 cents on the week, landing at $2.89. That’s the second-largest price drop in the nation this week, making the Commonwealth one of the 10 lowest price markets in the nation right now. The current gas price is 5 cents less than a month ago, but still 92 cents higher than a year ago.
Recovery from Ida remains slow, with the latest U.S. data showing just under half of the U.S. offshore oil production in the Gulf still idle after companies shuttered production ahead of the storm.
The constraint on stocks would typically lead to higher prices, but it has been offset by decreased demand going into the fall.
“Timing is everything, and while supplies have tightened due to the slow recovery after Hurricane Ida, this is also the point when gas demand starts its seasonal decline,” says Lori Weaver Hawkins, public and government affairs manager, AAA Blue Grass. “While there may be some price fluctuation, we expect most motorists to see stability at the pump.”
In the week ahead, pump prices may be impacted by Tropical Storm Nicholas, which is expected to bring heavy rains and a storm surge to the Texas coast this week. If the tropical storm puts additional refineries offline, we are likely to see prices pushed higher.
According to the Energy Information Administration (EIA), gasoline stock levels have fallen by 7.2 million barrels to 220 million barrels and they are expected to remain tight until Ida-affected refineries resume normal operations. While refineries are reporting progress towards restarting, the U.S. Department of Energy (DOE) said it would release an additional 1.5 million barrels of crude oil held at the U.S. Strategic Petroleum Reserve (SPR) to help ease tightened supplies. This is the second such release, and the DOE said the SPR has now released a total of 3.3 million barrels of crude oil in response to the storm.
The national average of $3.17 is a penny less than a month ago but is 98 cents more than a year ago.
The nation’s top 10 largest weekly decreases: Ohio (−5 cents), Kentucky (−4 cents), Illinois (−4 cents), Indiana (−4 cents), Nevada (−4 cents), Michigan (−3 cents), Florida (−2 cents), Oklahoma (−2 cents), Utah (−2 cents) and Tennessee (−1 cent).
The nation’s top 10 least expensive markets: Mississippi ($2.79), Texas ($2.81), Missouri ($2.83), Arkansas ($2.84), Alabama ($2.84), Oklahoma ($2.86), Louisiana ($2.89), Tennessee ($2.89), Kentucky ($2.89) and South Carolina ($2.89).
At the close of Friday’s formal trading session, WTI increased by $1.58 to settle at $69.72. Crude prices remain elevated as approximately 48% of crude oil production in the Gulf Coast region is shuttered due to Hurricane Ida, according to the federal Bureau of Safety and Environmental Enforcement. As production gradually returns to normal operations, crude prices should stabilize as supply increases. Additionally, crude saw jumps last week after the EIA reported that total domestic crude inventories decreased by 1.5 million to 423.9 million barrels.
AAA Blue Grass
