But Oregon average remains below national average for third consecutive week
“A combination of higher crude prices, refinery shut downs and speculation have sent gas prices soaring earlier than usual this winter, but the rate of increase has slowed down a bit this week. The national average for regular unleaded jumps seven cents this week, compared to a 17-cent spike last week, to $3.60. For the third week in a row, Oregon’s average remains below the national average, adding six cents this week to $3.57,” says AAA Oregon/Idaho Public Affairs Director Marie Dodds. “These prices are the highest on record for this calendar day. The national average has exceeded the previous highs set last year and has now set a new daily record for the past 13 days in a row. The Oregon average has set a new daily record for the past eight consecutive days.”
The national average has increased for 25 consecutive days, which is the longest streak since February and March 2012. This price surge is largely the result of higher crude oil prices, regional refinery issues and the switch from the cheaper winter-blend gasoline to the cleaner burning but more expensive summer-blend fuel.
Speculation is also playing a role in sending pump prices higher as more traders expect oil prices to rise in the coming months than to fall. The rally began in mid-January. According to last Friday’s Commodity Futures Trading Commission report, hedge funds, commodity pools and other investors have thrown close to $12.5 billion into a collective bet that gasoline prices will rise, closing in on the highest level ever of $13 billion, set last March.
Unlike recent years (Libya in 2011 and Iran in 2012), escalating geopolitical tensions overseas have not been a major contributing factor to the early-year price increase. Without a similar “risk premium” built into futures prices or new market-moving news, AAA expects that gas price spikes will slow as temporary production concerns are addressed. Based on this expectation, the national average is likely to peak this spring at a lower price than in the last couple years. In 2011, the national average peaked at $3.98 on May 5 and in 2012, it peaked at $3.94 on April 5 and 6. The Oregon average peaked at $3.97 on May 6 in 2011 and $4.27 on June 1 in 2012.
Prices in every state have increased over the last week, led by jumps in California and the Mountain States: Nevada (17.5 cents), Colorado (15 cents), Arizona (14 cents), California (13 cents) and Utah (12 cents). The price of gasoline in California rose above $4 per gallon on Friday, marking the earliest week in the year that California’s average has topped $4 a gallon, and the first time since November 3, when California was last above this level, that a state average in the continental U.S. has exceeded this threshold. Drivers in Hawaii still pay the highest price at the pump at $4.24 per gallon.
There were some reports of long lines at the pump as drivers filled up their cars in advance of winter storm “Nemo,” which blanketed much of the Northeast with snow over the weekend; however the ultimate short-term impact on regional retail prices was minimal as expected. The ultimate impact of the storm is likely to be one of demand destruction, as the snow continues to keep drivers off of the road in the densely populated Northeast. Traders are likely to keep a close eye on demand numbers when they are reported in the coming weeks.
After declining slightly to end last week, West Texas Intermediate (WTI) crude oil prices again moved up to start this week, settling $1.31 higher Monday at $97.03 per barrel at the close of formal trading on the NYMEX. Today WTI is trading around $97. Crude prices are up about 3.5 percent in the last month. Brent crude, the often cited global benchmark, is trading at about $118 per barrel, near highs last seen in April 2012.
California joins Hawaii as the two states with regular unleaded at or above $4 a gallon, and this week no states are below $3 a gallon, down from one state last week. For the 13th week in a row, both Oregon and Washington remain out of the ten most expensive states, but California remains in the top five in second. Hawaii has the most expensive gas in the country for the 17th consecutive week at $4.24, followed by California at $4.06 (up 13 cents and second for the second consecutive week), New York at $3.94, Connecticut at $3.91, and Alaska at $3.81. Oregon is 24th for the third week in a row at $3.57 (up six cents). Washington is 27th down from 26th last week at $3.57 (up six cents). Idaho is 47th down from 46th last week at $3.34 (up eight cents). Wyoming has the cheapest gas in the nation for the fourth week in a row at $3.07 a gallon (up 12 cents).
Diesel prices are also climbing. The national average gains seven cents to $4.06 while Oregon’s average rises a nickel to $4.06. Diesel is at or above $4 a gallon in 33 states (including the District of Columbia), up from 23 last week. Hawaii is most expensive at $4.89, followed by Connecticut at $4.37, New York at $4.37, Maine at $4.37, and California at $4.36 (up nine cents and down from fourth last week). Washington is 19th down from 17th at $4.12 (up eight cents). Oregon is 24th down from 21st last week. Idaho is 27th up from 30th at $4.04 (up a dime). A year ago, the national average for diesel was $3.93 and Oregon’s was $3.99.