PORTLAND, Ore., – Gas prices continue to fall in most states, including Oregon, even with volatility in crude oil prices due to the conflict between Israel and Hamas. Tepid demand for gasoline and cheaper winter-blend fuel are the major drivers of the declines. For the week, the national average loses four cents to $3.55. The Oregon average falls eight cents to $4.43. Oregon has the eighth-largest weekly decline for a state in the nation.
The national average has lost 33 cents since its year-to-date high of $3.88 on September 18. The Oregon average has fallen 34 cents since its year-to-date high of $4.77 on August 30. The national average is at its lowest price since July. The Oregon average is at its lowest price since June.
“This is the time of year when gas prices normally fall. However, uncertainty surrounding the conflict in the Middle East has impacted crude oil prices, which surged to near $90 per barrel last week before settling back into the low- to mid-$80 range this week,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “Israel and the Palestinian territory are not oil producers, but concerns remain that the conflict could spread in the region, which could impact global oil markets.”
Crude oil prices tend to rise when there are geo-political events involving oil producers. Crude prices spiked after the invasion of Ukraine by Russia last year because Russia is one of the world’s top oil producers, behind the U.S. and Saudi Arabia.
Gas prices normally decline in the fall, in part due to a drop in demand for gasoline compared to the summer months and the switch from summer-blend gas to winter-blend gas. Winter-blend gas is cheaper to produce than summer-blend fuel as it contains ingredients such as butane, so gas prices normally fall when the switch occurs. Summer-blend gas helps reduce emissions from gasoline during the warm summer months. More info on summer- and winter-blend gasoline can be found at the EPA website. The switch occurs on September 15 except California, which normally keeps summer-blend gasoline until October 31. This year, California allowed the switch to occur earlier because of refinery issues in that state that sent pump prices soaring on the West Coast in late September.
After the horrific attack on Israel by Hamas on October 7, crude oil prices increased by a few dollars but did not climb above $90. Crude oil prices surged above $90 per barrel in mid-September, the highest price since last November, in response to the announcement from Saudi Arabia and Russia that they would keep their production cuts in place through 2023. The cuts are one million barrels a day by Saudi Arabia and 300,000 barrels a day by Russia.
Crude oil is trading around $83 today compared to $87 a week ago and $79 a year ago. In September, West Coast Intermediate ranged between about $85 and $94 per barrel. In August, WTI ranged between about $77 and $85 per barrel. In July, West Texas Intermediate ranged between about $69 and $82 per barrel. In June, WTI ranged between about $67 and $73 per barrel. In May, WTI ranged between about $63 and $77 per barrel. In April, WTI ranged between about $73 and $83. In March, WTI ranged between about $64 and $81 per barrel. In February, WTI ranged between about $73 and $80 per barrel. In January, WTI ranged between about $73 and $82 bbl. Crude reached recent highs of $123.70 on March 8, 2022, shortly after the Russian invasion of Ukraine, and $122.11 per barrel on June 8, 2022. The all-time high for WTI crude oil is $147.27 in July 2008.
Crude oil is the main ingredient in gasoline and diesel, so pump prices are impacted by crude prices on the global markets. On average, about 50% of what we pay for in a gallon of gasoline is for the price of crude oil, 25% is refining, 11% distribution and marketing, and 14% are taxes, according to the U.S. Energy Information Administration.
Demand for gasoline increased from 8.58 to 8.94 million b/d for the week ending October 13, according to the U.S. Energy Information Administration (EIA). This compares to 8.68 million b/d a year ago. Meanwhile, total domestic gasoline stocks decreased by 2.4 million bbl to 223.3 million bbl.
Although higher demand and tightening supply typically increase pump prices, flat oil prices have had the opposite effect. If oil prices remain steady or fall, drivers can expect further price drops at the pump in the weeks ahead.
Oregon is one of 43 states and the District of Columbia with lower prices now than a week ago. Alaska (-18 cents and California (-17 cents) have the biggest weekly declines. Delaware (+14 cents) has the largest weekly jump. The average in Colorado is flat.
California ($5.42) has the most expensive gas in the nation for the 13th week in a row and is the only state with an average at or above $5 a gallon. Washington ($4.78) is second, Hawaii ($4.77) is third, Nevada ($4.68) is fourth, Oregon ($4.43) is fifth, Alaska ($4.35) is sixth, and Arizona ($4.16) is seventh. These are the seven states with averages at or above $4. Last week, there were also seven states with averages at or above $4 a gallon. This week 43 states and the District of Columbia have averages in the $3-range. No state has an average in the $2 range this week.
The cheapest gas in the nation is in Georgia ($3.01) and Mississippi ($3.02). For the 145th week in a row, no state has an average below $2 a gallon.
The difference between the most expensive and least expensive states is $2.41 this week, compared to $2.54 a week ago.
All 50 states and the District of Columbia have lower prices now than a month ago. The national average is 30 cents less and the Oregon average is 24 cents less than a month ago. Arizona (-49 cents) has the largest monthly drop. Hawaii (-10 cents) has the smallest.
Oregon is one of 43 states and the District of Columbia with lower prices now than a year ago. The national average is 25 cents less and the Oregon average is 65 cents less than a year ago. This is the third-largest yearly drop in the nation. Alaska (-74 cents) has the largest yearly decrease. Connecticut (+15 cents) has the largest year-over-year increase.
The West Coast region continues to have the most expensive pump prices in the nation with all seven states in the top 10. It’s typical for the West Coast to have six or seven states in the top 10 as this region tends to consistently have fairly tight supplies, consuming about as much gasoline as is produced. In addition, this region is located relatively far from parts of the country where oil drilling, production and refining occurs, so transportation costs are higher. And environmental programs in this region add to the cost of production, storage and distribution.
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As mentioned above, California has the most expensive gas in the country. Washington, Hawaii, Nevada, Oregon, Alaska, and Arizona round out the top seven. Oregon moves up to fifth most expensive after one week at sixth.
States in the West Coast region are seeing week-over-week declines. Alaska (-18 cents), California (-17 cents) and Arizona (-14 cents) have the largest weekly drops in the region and the nation. Washington (-10 cents), Nevada (-9 cents), Oregon (-8 cents), and Hawaii (-2 cents) are also seeing weekly declines.
The refinery utilization rate on the West Coast fell from 85.9% to 84.4% for the week ending October 13. This rate has ranged between about 73% to 96% in the last year. The latest national refinery utilization rate increased from 85.7% to 86.1%.
According to EIA’s latest weekly report, total gas stocks in the region rose from 29.49 million bbl. to 29.68 million bbl.
A lower refinery utilization rate can put upward pressure on pump prices, while an increase in gasoline stocks can put downward pressure on pump prices.
Oil market dynamics
Crude oil prices have been volatile since the attack on Israel by Hamas on October 7. Prices rose sharply shortly after the attack but have not maintained the higher prices due to global demand concerns. Crude prices rose last week on concerns that the Israel-Hamas war could lead to reduced oil output from countries in the region, but those concerns have eased for now. Additionally, the EIA reported that total domestic commercial crude supply dropped by 4.5 million bbl to 419.7 million bbl. last week.
At the close of Friday’s formal trading session, WTI lost 62 cents to settle at $88.75. At the close of Monday’s formal trading session, WTI fell $3.26 to settle at $85.49. Today crude is trading around $83 compared to $87 a week ago. Crude prices are about the same as a year ago.
Drivers can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.
For the week, the national average adds five cents to $4.51 a gallon. The record high is $5.816 set on June 19, 2022. The Oregon average falls six cents to $4.98. The record high is $6.47 set on July 3, 2022. A year ago the national average for diesel was $5.33 and the Oregon average was $5.67.
Find current fuel prices at GasPrices.AAA.com.
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Fuel prices are updated daily at AAA’s Daily Fuel Gauge at AAA Gas Prices. For more info go www.AAA.com. AAA Oregon/Idaho provides more than 890,000 members with travel, insurance, financial and automotive-related services, and is an affiliate of AAA National, serving more than 63 million motorists in North America.