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AAA: Slowing demand, lower oil prices drive gas cost drop; KY remains among 10 least expensive markets

Lackluster demand for gas coupled with lower oil prices led to pump prices falling again, down 17 cents since last week to $4.35. The steady decline is due to low domestic demand for gasoline and oil prices that remain in the mid-$90s per barrel. The price of gas has remained stable or dropped every day since hitting a record $5.01 on June 14. The same holds true for Kentucky: the state’s average for a gallon of unleaded has continued its downward trend since spiking at a record $4.79 on June 11.

“Lower demand during the height of summer tells us consumers have reacted to higher gas prices by fueling up less,” said Lori Weaver Hawkins, public affairs manager, AAA Blue Grass. “While there’s reason to be cautiously optimistic that pump prices will continue to fall, particularly if the global price for oil does not spike, the overall situation remains very volatile, especially as we enter the height of hurricane season.”

Weaver Hawkins says additional factors besides the potential for hurricane damage in the Gulf may also come into play, including the war between Russia and Ukraine and investor concerns over a slow down in the economy. She adds that it’s also possible increasingly lower prices at the pump will spur an increase in demand, reversing the supply-demand trend that dominated much of July.

(NKyTribune file)

“With so many factors in play, it’s hard to predict with any kind of certainty how long we’ll see the downward trend in gas prices continue,” Weaver Hawkins says. “But we’ll be watching all of these factors and the impact they have on the price of crude oil, the largest component of gasoline.”

According to new data from the Energy Information Administration (EIA), gas demand rose from 8.06 million barrels a day to 8.52 million barrels a day last week. However, that rate is 800,000 barrels a day lower than last year and is in line with demand during the middle of July 2020, when COVID-19 restrictions curbed demand. Additionally, total domestic gasoline stocks increased by 3.5 million barrels to 228.4 million barrels, signaling that low demand led to growth in inventory last week. If gas demand remains low as stocks increase, alongside a continuing reduction in crude prices, drivers will likely continue to see pump prices decline. But as stated previously, there are a number of factors that will go into determining what oil prices do in the future, and how gas prices are impacted.

Today’s national average of $4.35 is 63 cents less than a month ago and $1.20 more than a year ago.

Kentucky’s gas price average is now at $4, which is 18 cents lower on the week and putting it within the top 10 least expensive markets in the nation in terms of gas prices. Today’s price is 64 cents lower on the month, but still $1.12 higher than a year ago.

Gas prices in Lexington are averaging $4.16, which is 19 cents lower on the week and 52 cents lower on the month. The average price in Lexington a year ago was $2.91.

The average gas price in Ashland is now $4.40. That’s 17 cents lower than a week ago and 37 cents lower than a month ago. The average price for Ashland a year ago was $2.95.

There are now 24 counties in Kentucky averaging below $3.80 a gallon. The lowest average is in Edmonson County at $3.58, followed by Simpson County at $3.60 and Fulton County at $3.63. The county with the highest average is Lewis County at $4.52.

For those planning to travel around the region, the average price for a gallon of unleaded today in Ohio is $4.15, West Virginia $4.47, Virginia $4.13, Tennessee $3.93, Indiana $4.37, Illinois $4.82 and Missouri $4.02.

Travelers planning a road trip to the west or southwest U.S. can expect to see considerably higher gas prices, while those planning a road trip to the southeast will enjoy the lowest prices at the pump. Only seven states in the nation still average at or above $5 a gallon mark, down two from last week.

The highest spot in the nation remains California, now at $5.73 after a 16-cent drop on the week, followed by Hawaii at $5.52, which fell 7 cents on the week. Alaska follows at $5.22, taking a 13-cent plunge on the week. Oregon is the highest spot within the continental U.S. behind California, now $5.16.

Texas has the lowest gas price average in the nation today, currently at $3.85, followed by South Carolina at $3.86.

The nation’s top 10 largest weekly decreases: Kansas (−29 cents), Iowa (−25 cents), Oklahoma (−25 cents), Missouri (−23 cents), Ohio (−22 cents), Wisconsin (−22 cents), Nebraska (−22 cents), Delaware (−21 cents), Wyoming (−21 cents) and Indiana (−21 cents).

The nation’s top 10 least expensive markets: Texas ($3.85), South Carolina ($3.86), Georgia ($3.88), Mississippi ($3.89), Alabama ($3.92), Tennessee ($3.93), Arkansas ($3.93), Louisiana ($3.94), Oklahoma ($3.96) and Kentucky ($4.00).

At the close of Friday’s formal trading session, West Texas Intermediate decreased by $1.65 to settle at $94.70. Crude prices declined last week as the market continues to worry that weak demand, which was expected to remain robust throughout the summer, could continue to push prices lower. A strengthening dollar also helped to push crude prices lower last week. For this week, crude prices could continue to decline if demand concerns persist. Additionally, EIA reported that total domestic crude stocks decreased by 500,000 bbl to 426.6 million barrels, just over 13 million barrels lower than the storage level in mid-July 2021.

AAA Blue Grass

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