Back in June there seemed to be little hope on the horizon for motorists enduring trauma at the pump due to the high cost of gasoline.
Then something happened. The price of crude oil began falling, and with it the cost of a gallon of gas. The downward trend has been going on for 11 weeks straight, according to GasBuddy Senior Petroleum Analyst Patrick De Haan.
Whether it will last is another question.
“Gas prices are now $1.20 per gallon lower than mid-June, with Americans spending $450 million less on gasoline every day as a result,” he said.
On June 6, the cheapest gallon of regular in the Lower Rio Grande Valley, according to GasBuddy.com, was to be had for $4.26 in La Feria. In McAllen and Pharr, it was $4.29. As of press time Monday the Valley had some of the cheapest gas in the nation, with a gallon of regular going for as low as $3.01 at a couple of stations in Brownsville and even $2.97 at a few places around McAllen.
While the national average for gas is down almost $0.40 from a month ago, it’s still more than $0.69 higher than a year ago, according to a GasBuddy analysis of 11 million individual price reports covering more than 150,000 stations nationwide. Driving high oil prices earlier this year was a sudden rebound in demand as the economy recovered from the pandemic, but with too many refineries still offline, plus Putin’s invasion of Ukraine and the subsequent massive sanctions imposed on Russian oil exports.
Behind the steady decline in the price of oil over the summer is growing stockpiles of crude combined with weakening demand. Retail gasoline demand fell by 4.1 percent the week of Aug. 21-28 in the Petroleum Administration for Defense Districts (PADD) region made up of Texas, New Mexico, Louisiana, Arkansas, Mississippi and Alabama, according to GasBuddy.
PADD regions were created during World War II for the purpose of rationing gasoline. Today they’re used to assess regional petroleum product supply data provided by the U.S. Energy Information Administration (EIA).
Despite the steady fall in crude prices since June, on Monday a barrel of West Texas Intermediate crude rose 19 cents to $93.25 a barrel, up $6.00 from the previous Monday’s barrel. Brent crude oil was up closer to $8 as of Monday at $101.01 per barrel, up from $93.50 on Aug. 22. Meanwhile, OPEC is discussing curtailing its oil production, citing the possibility of an economic slowdown.
Crude oil inventories fell 3.3 million barrels last week to a level 6 percent below the five-year average for late summer, according to the EIA, while total U.S. petroleum inventories are down 43.3 million barrels from a year or ago, or 3.4 percent lower than last year.
The median U.S. price for a gallon of regular is $3.65, down $0.12 from last week and roughly $0.16 cents lower than the national average, according to De Haan. Texas, Arkansas and Mississippi have the nation’s lowest gas prices currently, averaging $3.32 to $3.34. The most expensive gas is to be found in Hawaii, California and Nevada, $5.26, $5.22 and $4.85 on average, respectively.
As for where things go from here, De Haan said there are some issues worth keeping an eye on, including the shutdown of the Midwest’s largest oil refinery, located in Indiana and among the 10 biggest refineries in the United States, due to a fire. Also, the Atlantic hurricane season seems to have been aroused from its slumber, he said.
“While that refinery may get back online sooner rather than later, it’s not impossible that down the road the situation could impact prices in the region,” De Haan said. “For the rest of the country, however, we’ll continue to see prices moderate. This is of course subject to hurricane season, and it does appear that the tropics are starting to see some activity, so there’s no guarantee the decline will continue.”
