Gas Prices Drop as OPEC Maintains Oil Production Levels

By AAA Kansas
December 01, 2014
AAA Kansas

Kansas is tied for fifth among the states experiencing the largest monthly savings in gas prices. Every state but Delaware is registering a double-digit discount and drivers in 17 states are saving more than a quarter per gallon. States in the Midcontinent region are recording the largest savings over this period: Oklahoma (-46 cents), Minnesota (-43 cents), South Dakota (-43 cents) and Missouri (-38 cents).

Sharply lower global oil prices have been the driving factor for lower retail gas prices. Prices dropped even lower last week when, despite the falling price of global oil, the Organization of Petroleum Exporting Countries (OPEC) elected to maintain its collective production ceiling when the group met last Thursday. There had been speculation that the group might take some action to cut collective production to raise prices. This leaves the balance between supply and demand to decide the global price of oil, and with supply outpacing demand the price for crude is expected to remain relatively low. Following the news, West Texas Intermediate (WTI) plummeted more than ten percent ($7.54) in Friday’s trading to settle at $66.15 per barrel. The ultimate market implications for OPEC’s inaction remain unclear, however many market watchers have indicated that they see it as a signal that the oil cartel is more focused on maintaining market share and hoping for prices to stabilize in the winter months as global demand increases.

Drivers enjoyed the lowest retail average for Thanksgiving since 2009, with the Kansas state average at $2.61 per gallon this past Thursday, and pump prices are poised to continue to drop this holiday season. The state average has fallen on 28 consecutive days, for a total drop of over 34 cents during this streak. Today’s price of $2.61 is seven cents less than one week ago, 36 cents less than one month ago and 40 cents less than one year ago. The state average is the lowest since September 8, 2010.

The state average has been below the $3.00 per gallon benchmark for 48 days, since October 14th, and 42 states are now registering averages below $3.00 per gallon. This number is set to increase in the coming days and it’s likely that New York and Connecticut will be the only states in the lower 48 above this threshold by the end of next week.

Tumbling crude prices continue to put downward pressure on the price at the pump with drivers in Missouri ($2.47), Mississippi ($2.53), South Carolina ($2.53) and Texas ($2.54) paying the nation’s lowest prices per gallon. For the fourth week in a row, the average price at the pump is below $4.00 per gallon in every state and Washington, D.C. Hawaii ($3.87), Alaska ($3.50), New York ($3.16) and Connecticut ($3.11) lead the retail gasoline market with the nation’s highest averages.

Consumers in 48 states and Washington, D.C. are experiencing week-over-week savings. The average price at the pump is down by a nickel or more in 18 states, with the largest savings in Missouri (-10 cents), South Dakota (-9 cents), Utah (-9 cents) and Idaho (-9 cents). Consumers in the Midwestern states of Ohio (+2 cents) and Indiana (fractions of a penny) are paying a bit more to refuel their vehicles over this same period, but prices in the region are positioned to head lower over the next week as wholesale prices have fallen.