AAA: Gas prices falling as demand falls, inventories rise
Kentucky motorists are finally seeing some relief from rising gas prices of the past several weeks. AAA Bluegrass reports that a continued drop in consumer demand and increased inventories are easing average gas prices in the Bluegrass as well as across the nation.
After posting some of the largest week over week gas price increases, Kentucky had the eighth greatest week over week change in gas prices in the nation – but this time, that change came as a welcome decline in average price. Gas prices fell 7 cents on average across the Commonwealth, while Lexington motorists enjoyed a more dramatic decline of 15 cents since last week.
“Gas prices may be signaling that they are finally decreasing, which is good news for motorists who have been paying unseasonably high pump prices to fill up as of late,” said Lori Weaver Hawkins, manager of public and government affairs for AAA Bluegrass.
Although the September switch-over to winter-blend gasoline should have ushered in lower gas prices compared to summer, Kentucky had not seen the expected relief at the pumps until this past week. High crude oil prices and regional refinery maintenance had kept gas unseasonably expensive in the central region of the U.S.
Domestic inventories grew more than anticipated last week, bringing about welcome relief at the pump. But a number of factors will determine whether gas prices will continue their downward climb, including pace of domestic crude oil production, changes in demand and tensions in the Middle East.
Prices decline across Bluegrass
Prices declined throughout most of Kentucky, although some areas saw more modest drops in average price than others. The only metro area to see an increase week over week was Henderson in western Kentucky, near the Indiana border, which saw its average gas price increase from $2.55 to $2.57.
Lexington motorists saw the most dramatic drop in prices on average in the Bluegrass, falling from an average of $2.84 a week ago to just $2.69.
Lower gas prices come to Central Region
For the first time in weeks, all Great Lakes and Central states, including Kentucky, are seeing gas prices decline, with some pump prices declining by double-digits. Six states top the list of the largest decreases in the country: Ohio (-14 cents), Michigan (-12 cents), Indiana (-10 cents), Illinois (-8 cents), Kentucky (-7 cents) and Wisconsin (-5 cents).
A factor helping to drive down gas prices is the increase of nearly 600,000 bbl of gasoline inventories amid declining gasoline demand. The build brought levels back up to 52 million bbl once again, which, despite being a low inventory level for the region this year, is a 2.4 million year-over-year surplus. If inventories continue to increase, prices are likely to continue to fall.
Oil market dynamics
Oil prices saw whiplash last week, falling in line with the major selloff that occurred for the Dow Jones Industrial Average. Crude prices may continue to climb this week as tensions in the Middle East take center stage, while U.S.-imposed sanctions on Iran’s energy sector continue to loom over the market.
The slight gains crude prices saw at the end of last week occurred despite total domestic crude inventories growing to 410.0 million bbl last week. However, crude storage levels are 52.2 million bbl lower than where they were this time last year. The year-over-year deficit has contributed to rising crude prices, which has led to the most expensive fall gas prices since 2014.
National gas price average down
At $2.89, the national gas price average is two-cents cheaper than it was a week ago amid consumer gasoline demand declining for a third week. Today’s gas price average is four-cents more than a month ago and 42-cents more expensive than a year ago.
AAA money-saving pump tips
• If your vehicle’s engine does not require premium or mid-grade fuel, don’t buy it. Using anything other than regular grade is simply a waste of money.
• Don’t top off your gas tank. Stop filling after the automatic nozzle shuts off the second time.
• If you have to replace a gas cap, make sure it is the right one for your car. An ill-fitting cap will increase emissions and trigger the “check engine” light.
• Keep track of gas mileage. If you notice a sudden decrease in fuel economy, have your vehicle checked by a technician to ensure it is operating properly.