Since Monday, the national average price for a gallon of regular gasoline has decreased by 4 cents to $1.88, with a Kansas average of $1.62. Low crude prices due to COVID-19 and lower demand for gas, as Americans continue to socially distance, have helped to push pump prices lower, the American Automobile Association reported.
With Americans expected to remain at home in the weeks ahead, demand for gas is likely to continue declining alongside pump prices. In its latest weekly report, the Energy Information Administration reported gas demand plunged to 5.1 million barrels per from the previous week’s rate of 6.7 million.
In Kansas Friday, the low was $1.13 at Rose Hill and a high was $2.30 at 126 W. Ave. A and Adams Street in Hutchinson.
Closer to home, the price per gallon was $1.49 in Great Bend, $1.46 at Ellinwood, $1.43 at Stafford and $1.42 at La Crosse.
In addition, this marked the sixth straight week, and now around 50 straight days, the national average price of gasoline has fallen, according to GasBuddy data compiled from more than 11 million individual price reports covering over 150,000 gas stations across the country. The average price of diesel, meanwhile, fell 4.7 cents to $2.56 per gallon.
“The national average continues to fall as every state has seen yet another decline in average gas prices over the last week as overall oil demand remains constrained due to COVID-19,” said Patrick DeHaan, head petroleum analyst for GasBuddy. “The decline has been most significant thus far in the Great Lakes, due to the region being landlocked and challenging to ship gasoline out of, prices have been depressed significantly, driving these states to some of the lowest prices in the country.”
Crude oil prices surged late last week after President Trump signaled that he talked to Russia and Saudi Arabia, who met Thursday to discuss cutting cut oil production. Oil surged from $20.55 on Monday and closed the week above $28 and had its largest single-day percentage increase Thursday.
As of Monday morning, a barrel of West Texas Intermediate crude oil was down 86 cents per barrel, or 3.03%, to $27.47 per barrel. Brent crude had seen an even larger rise over the last week. As of Monday morning, Brent crude oil was down 82 cents to $33.29, compared to $23.03 a week ago.
What is to come
Data from the Energy Information Administration last week finally showed a gaping hole between supply and demand, DeHaan said. Oil inventories soared by 13.8 million barrels, while gasoline inventories jumped 7.5 million barrels.
DeHaan said refiners are likely gearing up for heavy products like diesel, since diesel demand remains stronger than gas. Refinery use fell 5% to just 82.3% of capacity as refiners slowed operations.
“At gas pumps, prices continue to move lower, albeit at a much slower pace this week,” the Gasbuddy analyst said. Over 110,000 gas stations are selling gasoline under $2, with nearly 20,000 stations under $1.50.
Additionally, AAA notes that domestic crude prices (West Texas Intermediate) decreased by $2.33 and settled at $22.76 on Thursday, according to the AAA. Crude prices have remained volatile this week, following Thursday’s announcement of a tentative reduction agreement between the Organization of the Petroleum Exporting Countries and other major crude oil producers, including Russia.
Final details are still pending, but the collective effort is expected to cut global crude production by 10 million barrels per day for May and June 2020, while 8 million could be cut for the remaining months in 2020. For 2021 and potentially 2022, OPEC and its partners may enact a cut of 6 million.
Market observers are skeptical of the cuts and are unsure if they are drastic enough to help prop up prices, which has prompted current crude prices to remain volatile. Moreover, the agreement still hinges on Mexico agreeing to the production cuts, adding more uncertainty and price volatility. Crude prices will likely remain volatile until the market sees the final details of the deal.
DeHaan agrees that all eyes will be on what happens with oil production this week in light of the OPEC-Russian pact. But, “for now, motorists shouldn’t worry too much about a potential oil production cut impacting gas prices as retail prices still have substantial room to fall to catch up to lower wholesale prices.”
