Average gas prices in two states – Missouri ($1.93) and Oklahoma ($1.98) – have dropped below $2.00 per gallon for the first time since 2009, and Kansas is close behind, sitting just above the mark at less than $2.03 a gallon. The Kansas average has fallen 62 days in a row going back to October 29, for a total of 96 cents in consecutive daily declines, and prices have plummeted $1.53 (nearly 43 percent) since the peak Kansas 2014 price on June 26. Kansans are saving 14 cents from a week ago, 60 cents from a month ago and $1.08 compared to one year ago today (35 percent less).
The national average price for regular unleaded gasoline is $2.29 per gallon, and motorists are saving 11 cents per gallon compared to one week ago, 49 cents compared to one month ago and $1.02 per gallon compared to this same date last year. AAA estimates that drivers are saving more than $500 million per day each day compared to the highs in both the spring and summer.
The average price at the pump is below $2.50 per gallon in more than two-thirds of all states (38). Drivers in the Midwest continue to pay the lowest averages in the nation, while the most expensive prices in the continental United States are in the Northeast continue to pay the highest averages in the continental U.S., led by New York ($2.81), Vermont ($2.74) and Connecticut ($2.69). Hawaii ($3.53) and Alaska ($3.09) remain the nation’s most expensive markets for retail gasoline and are also the only two states with averages above $3.00 per gallon.
The global oil market remains in a state of perceived oversupply due to record production from the United States combined with lower than expected global demand. Despite falling crude prices, Saudi Arabia, OPEC’s largest exporter of petroleum, has reiterated the cartel’s intention to maintain current production levels and allow the market to self-correct. This move could put pressure on production with higher cost production areas, such as the United States, facing a market where low prices make production unprofitable. The ripple effects of prolonged low oil prices could also pose a challenge to countries whose economic stability is dependent on revenue from oil production. As has been the case in recent years in Egypt, Libya and Iran, this sort of geopolitical unrest can impact global supply and pressure oil prices higher on the threat of a disruption.
The impact of instability in oil producing nations was on display today, as crude prices posted gains to begin the morning following the escalation of violence in the Libyan port of Misurata. A fire caused by Libyan rebels is reported to have destroyed approximately two days of output from this OPEC-member country, and an additional six-million barrels stored at the port are also in jeopardy. This follows recent reports that Libyan production of crude oil has dropped by half over the last month due to fighting. Market watchers will continue to monitor the situation to ensure that production is not further impacted and violence does not spread to neighboring countries.
On Friday, at the close of formal trading, WTI closed down $1.11 per barrel at $54.73 per barrel on the NYMEX.