While most states saw gas prices trend lower to start off the first week in February, the average gas price of $2.10 for Kentucky is about 2 cents higher than a week ago following a price jump during the stretch of frigid weather.
“Three-fourths of the country faced below-freezing temperatures last week. The forecast may have prompted many motorists to fill up early and often, ahead of the severe cold and snow, which in turn drove demand upward,” said Lori Weaver Hawkins, public and government affairs manager, AAA Blue Grass. “Now that the wave of severe cold, ice and snow has passed, demand is likely to fall more in line with what we typically see in February.”
With the majority of state gas price averages decreasing, the national gas price average held flat at $2.26 even though the Energy Information Administration’s (EIA) latest demand rate reflected summer-like numbers.
For the week ending Jan 25, the EIA reported U.S. gasoline demand at 9.6 million barrels per day. The last time the rate was this high was during the 2018 Labor Day weekend. The EIA rate is an estimate and considered preliminary until the agency releases final figures for the month.
If the estimate is not revised, last week’s extreme cold weather is likely behind the spike in demand. “This preparedness—filling of gas tanks before severe weather–is similar to what we see prior to hurricanes,” explained Weaver Hawkins.
Today’s national gas price average is a penny more expensive than a month ago, but 34 cents less expensive than a year ago. Kentucky’s current average of $2.10 is more than 40 cents less than a year ago.
Gas Prices Had Their Ups and Downs in the Bluegrass
The severe cold and associated jump in demand had more influence on gas prices in some areas of Kentucky than others. Lexington average gas price is back at 2.07, just a penny more than a week ago, following an upward climb for several days and a five cent drop overnight. The average gas price in Lexington was $2.47 a year ago.
Currently, average gas prices are trending lower, week over week, in several metro areas of Kentucky, including Bowling Green, Covington, Hopkinsville, and Huntington-Ashland, while prices remain higher in Elizabethtown-Fort Knox area, Henderson, Louisville, and Owensboro.
Central States Hit By Polar Vortex See Price Increase
Five of the eight states in the country to see gas prices increase on the week hail from the Great Lakes and Central states regions (areas hard hit by last week’s Polar Vortex). They include: Illinois (+6 cents), Ohio (+6 cents), Indiana (+4 cents), Wisconsin (+4 cents) and Indiana (+2 cents).
States throughout the rest of the region have averages that are as much as three-cents cheaper than last week. With last week’s major winter storm in the rear-view mirror, much of the region has dug out and roads are passable. This will likely contribute toward retail prices mostly holding steady or declining in the week ahead for much of the region.
Year-over-year, motorists in the region are seeing big cost savings—among the largest in the country. Seven states in the region make the top 10 list for largest year-over-year changes, all of which are about 50-cents cheaper: Iowa (-58 cents), Nebraska (-55 cents), Minnesota (-53 cents), Michigan (-52 cents), Kansas (-51 cents), North Dakota (-49 cents) and Missouri (-48 cents).
EIA data for the week ending January 25 show gasoline stocks had a marginal increase of nearly 300,000 barrels. Total stocks register at 61.5 million barrels. This past weekend a fire was reported at PBF Energy’s Toledo 188,000 barrel-a-day refinery in Ohio. Local media reported that the fire started at the plant when a railroad tanker car containing gasoline exploded. No further information was available and it’s unclear the impact to refinery operations at this time.
Quick Stats on the Nation
The nation’s top 10 least expensive markets are: Missouri ($1.90), Arkansas ($1.93), Oklahoma ($1.94), Kansas ($1.95), Mississippi ($1.96), Texas ($1.96), Alabama ($1.97), South Carolina ($1.98), Louisiana ($2.00) and Colorado ($2.02).
The nation’s top 10 largest monthly changes are: Utah (-24 cents), Wyoming (-22 cents), Colorado (-20 cents), Idaho (-20 cents), Alaska (-19 cents), Washington (-17 cents), Arizona (-17 cents), Oregon (-15 cents), Florida (+14 cents) and Ohio (+13 cents).
Oil Market Dynamics
At the close of Friday’s formal trading session on the NYMEX, WTI increased $1.47 to settle at $55.26. Oil prices mostly increased last week, following indications of tightened global supply this year. Alongside OPEC’s production reduction agreement of 1.2 million barrel per day for the first six months of 2019, the recently announced U.S.-imposed crude export ban on Venezuela has made market observers worry that global crude supplies will shrink and rebalance prices. Worries over tighter supplies amid robust demand, which could dampen because of the continued trade tensions between China and the U.S., will likely continue to lift the global price of crude.
Moreover, EIA’s weekly petroleum report this week showed that total domestic crude inventories grew by 1 million barrels last week to 446 million barrels, much less than the market expected and despite crude production maintaining its record-breaking pace at 11.9 million barrel per day last week. Moving into this week, crude prices will likely continue their ascent, making headway for increased gasoline prices after winter.
In related news, Baker Hughes Inc. reported that the U.S. lost 15 oil rigs last week, bringing the total to 847. When compared to last year at this time, there are 82 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.
