AAA: Gas prices hit 2016 high heading into Memorial Day
Gas prices are at their highest point for the year as we approach the Memorial Day holiday, and the national average has increased for 12 days in a row. Today’s average of $2.28 per gallon is up six cents per gallon on the week and 15 cents per gallon on the month. Despite this increase, drivers remain on target to pay the lowest prices for the Memorial Day holiday since 2005. AAA projects more than 38 million Americans will travel this Memorial Day weekend, which is an increase of 700,000 compared to a year ago. That is the second-highest Memorial Day travel volume on record and the most since 2005. Nearly 34 million (89 percent) holiday travelers will drive to their Memorial Day destinations, an increase of 2.1 percent over last year.
- The nation’s top five most expensive markets are: California ($2.80), Hawaii ($2.66), Washington ($2.59), Alaska ($2.58) and Nevada ($2.49).
- The nation’s top five least expensive markets are: Mississippi ($2.05), South Carolina ($2.06), Arkansas ($2.06), Texas ($2.07) and Missouri ($2.07).
- For the first time since August 2015, drivers in every state and Washington, D.C. are paying averages above $2 per gallon.
California ($2.80) and Hawaii ($2.66) are the two most expensive states in the nation, but prices have remained relatively steady over the past week. Gasoline inventories are posting a surplus in comparison to last year and gasoline production in the region is also on par with year-ago levels. As a result, drivers in the region are benefitting from some of the nation’s largest yearly savings in the price at the pump. The West Coast states of California (-97 cents), Nevada (-82 cents), Alaska (-69 cents), Arizona (-63 cents) and Hawaii (-63 cents) lead the nation and are posting the largest year-over-year discounts in the price of gas.
Drivers in Gulf Coast states continue to pay some of the nation’s least expensive prices at the pump. Mississippi ($2.05) is the nation’s cheapest state, and six of the nation’s top 10 least expensive markets are also located in this region. Consumers in the Gulf Coast have seen prices climb higher on the week with every state posting an increase of a nickel or more per gallon at the pump. Gas prices are reportedly responding to a number of refineries in the region going offline to conduct unplanned maintenance, including Marathon’s Galveston Bay, Texas plant, which is one of the country’s largest and most complex refineries. Despite the region’s production challenges, the market remains well supplied with gasoline and prices are expected to remain relatively low.
Regional gasoline inventories decreased for the 14th consecutive week. Interruptions in crude oil deliveries to refineries in the Midwest, due to fires in the Canadian Oil Sands, are challenging the ability of the local market to meet growing demand. Pump prices continue to swing in the region and the Midwestern states of Ohio (+13 cents), Michigan (+13 cents) and Indiana (+11 cents) lead the nation, posting the largest week-over-week increases in the price of gas. Minnesota (+23 cents), Michigan (+21 cents), Wisconsin (+20 cents) and Ohio (+20 cents) rank in the nation’s top 10 largest monthly increases, and every state in the region is posting double-digit increases over this time period.
Planned and unplanned refinery maintenance is also causing prices to fluctuate in the region. Output at BP’s Whiting, Indiana plant and the BP-Husky plant in Toledo, Ohio are expected to be limited for the next few weeks. Growing gasoline demand within the region, combined with supply challenges, are likely to contribute to prices remaining volatile leading into the summer driving season.
One of the largest refineries on the East Coast, the Philadelphia Energy Solutions refinery complex, experienced a fire Friday afternoon. The extent of the damage is still being assessed, and regardless of any downtime associated with this incident, prices in the region are expected to remain relatively steady due to the abundant supply of gasoline and inventories in the New York Harbor region.
Oil Market Dynamics
Global crude oil prices recently moved higher due to unexpected declines in oil production in various parts of the world, such as Canada and Nigeria. This rally was short lived and the market once again reflected a bearish sentiment following reports of a strengthening U.S. dollar and questionable global demand. The United States’ role as swing producer is also garnering attention, with domestic production falling to its lowest levels since September 2014. Market watchers are paying close attention to how domestic producers are responding to changes in the global price of crude and the impact of their actions on the global oil prices. At the close of Friday’s formal trading session on the NYMEX, WTI closed out the week down 41 cents to settle at $47.75 per barrel.
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