This has been an exciting week for America’s stock market as the DOW reported its biggest loss of the year —down 531 points — on Friday, August 21, 2015. [Ref 1] Some analysts tie these losses to the slowdown of China’s economy and the devaluation of its currency, while others indicate that the market was overdue for a correction.
With the usual bells and whistles of Wall Street, some may have missed another item in the news: crude oil selling at less than $40 a barrel – a price not seen since 2009. My last post on gas prices, Which Direction Will Gas Prices Move After Summer 2015 Driving Season?, was written about three weeks ago. I hadn’t planned to publish another post on this topic until after Labor Day Weekend. However, these new develops are worth mentioning from someone who tracks gasoline prices.
The lower price of crude comes with both good and bad news for the economy. Most people, myself included, speculate that the lower price of West Texas Intermediate (WTI) crude will mean lower prices at the pump for motorists thru the end of this calendar year, and possibly well into 2016. However, lower crude oil prices have impacted the stock of energy companies which may spell lay-offs for oil drillers and refiners.
GasBuddy.com reports the following stats for today’s average cost of a gallon of regular gasoline in the U.S.:
One Week Ago $2.661
One Month Ago $2.757
One Year Ago $3.432
As you can see from the above data, the average price of petro has dropped 13.4 cents in the last 30 days. According to AAA, “Strong fuel demand and refinery problems have kept gas prices higher than would otherwise be expected based on the cost of crude oil…Strong gasoline demand can lead to tight supplies, especially if refineries are experiencing problems.” [Ref 2]
Tom Kloza, chief global analyst for the Oil Price Information Service states, “An emergency shutdown last week of BP’s Whiting, Ind., refinery, the largest in the Midwest, drove up gas prices in the region by 40 to 60 cents a gallon and the national average by 8 cents…The outage is expected to last another month or so.” [Ref 3] We’ve already seen the impacts of an unplanned refinery outage on local gasoline prices in California (see Mid-Summer 2015 Gas Price Check) and other impacts from the Torrance refinery explosion that occurred earlier this year.
Kloza and others cite this summer as one of the busiest driving seasons since 2007. That along with the unscheduled outages and summer fuel blends have kept gasoline prices higher than expected given the cost of crude. We’ll take another look at gas prices on this blog in another three or four week – after the summer driving season has ended.
In the meantime, enjoy falling prices for gasoline as we motor to the Labor Day Weekend.
1. Dow Plunges 531 Points, by Patrick Gillespie for CNN Money, http://money.cnn.com/2015/08/21/investing/stocks-market-lookahead-august-21/index.html
2. Gas Price Decline May Accelerate In August, AAA Daily Fuel Gauge Report, August 5, 2015, http://fuelgaugereport.aaa.com/gas-price-decline-may-accelerate-in-august/
3. Gas prices outpace cheap oil, but could fall soon, by Paul Davidson in USA Today, August 18, 2015, http://www.usatoday.com/story/money/2015/08/17/oil-prices-reach-new-low/31873975/