Our house has seen an increase in younger visitors now that most K thru 12 schools are on summer break. Here in the U.S., we observed Memorial Day earlier this week. Traditionally, the Memorial Day weekend marks the beginning of the summer driving season….and a very good reason to take a look at trends in gas prices.
However, before we review prices at the pump, let’s take a look at activities occurring domestically or internationally that may have an impact on crude oil and gasoline prices. Geopolitical tensions have been strained in the Ukraine, a country that has seen continued challenges to its borders following the conclusion of the Winter Olympics that were held earlier this year in the resort town of Sochi, Russia. This past weekend, The Ukraine elected a new president, Petro Poroshenko. It remains to be seen if this new political leader will increase stability in the region.
According to a New York Times article [Ref 1], “Gasoline prices are dropping primarily because of a decline in global crude oil prices, stemming from an easing of tensions in the Middle East, and growing oil supplies, bolstered in recent months by the rapid return of Libyan oil exports and increased production from Saudi Arabia.”
Here in the U.S, drivers on the East Coast are being greeted by lower gasoline prices. One reason cited for the lower prices is no disruptions to the supply chain that was expected due to the closure of a large refinery owned by Sunoco the end of June. [Ref 1] As it turns out, the refinery will stay open for most of the summer while a private equity firm negotiates a joint venture partnership. Delta Air Lines also bought an idled Pennsylvania refinery giving the region better oil prospects. More gasoline will be produced in the region beginning this October.
However, news is not as good on the West Coast. Gasoline prices have been rising in the Los Angeles area because several refineries have been shut-down due to power failures and repairs on heavy equipment such as compressors. Refinery owners project bringing equipment back on line this June. For sure, these are very interesting times both in the international and domestic markets.
AAA [Ref 2] reported earlier this week that for the first time in 2014, consumers in three states are paying $4 or more per gallon: Hawaii ($4.37), California ($4.12), and Alaska ($4.00). However, if you lived in Missouri, your state has the cheapest gas at $3.38 per gallon – 99 cents cheaper than Hawaii. Ouch!
And here’s how gas prices are trending today for regular (87-octane) gasoline:
Phoenix, AZ / USA Average
Today: $3.501 / $3.649
Yesterday: 3.509 / 3.645
One month ago: 3.493 / 3.657
One year ago: 3.478 / 3.642
Source: GasBuddy.com May 30, 2014
So far, so good! As of today, analysts project that gas prices won’t rise much higher through the end of the summer. Stay tuned.
1. Gas prices modestly lower as summer driving season starts, by Clifford Krauss, published on May 24, 2014, http://www.nytimes.com/2012/05/25/business/energy-environment/summer-gas-prices-expected-to-be-modestly-lower.html
2. High Gas Prices to Start Summer Driving Season, AAA News Room, May 27, 2014, http://newsroom.aaa.com/tag/gas-prices/