The average price of gasoline across the U.S. continues to increase, reaching an average of $2.37 per gallon, the most expensive it has been since June 2016, just as the fuel economy of new vehicles purchased in the U.S. declined during 2015.
AAA’s weekly survey of fuel prices observed that gasoline prices have moved higher by three cents per gallon on the week and 17 cents per gallon on the month.
Retail prices have increased for 40 of the past 42 days as a result of market reactions to the OPEC oil cut agreement. Traders and industry alike will keep a close eye on OPEC compliance as they await the release of the first output report which is expected in mid-February, AAA reported.
The average fuel economy (window-sticker value) of new vehicles sold in the U.S. in December was 24.9 mpg—down 0.1 mpg from the revised value for November.
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This change likely reflects the continuing increase in the proportion of light trucks sold, according to the monthly study prepared for the University of Michigan Transportation Research Institute by Michael Sivak, director, Sustainable Worldwide Transportation and Brandon Schoettle, project manager, Sustainable Worldwide Transportation.
The value for December 2016 is up 4.8 mpg since October 2007, the first month of monitoring, but down 0.6 mpg from the peak of 25.5 mpg reached in August of 2014, according to the study.
The average fuel economy of new vehicles sold in 2016 was 25.2 mpg, down 0.1 mpg from 2015, the study noted.
AAA found the nation’s least expensive markets are: South Carolina and Tennessee at $2.14 per gallon; Mississippi at $2.15; Alabama, Arizona and Arkansas $2.16; and Texas and Oklahoma at $2.17.
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The biggest weekly increases were in Michigan, where the price of gasoline jumped by 9 cents per gallon, and Pennsylvania and Delaware, where a gallon of gasoline increased by eight cents per gallon, and Oregon, where it increased by 7 cents per gallon
Gasoline inventories in the Midwest remain abundant and production from regional refineries is also high, however, pump prices in the region remain volatile, according to the U.S. Energy Information Administration.
Monthly increases in Michigan of 34 cents per gallon, Wisconsin of 28 cents per gallon, Illinois and Ohio of 27 cents per gallon as well 26-cents-per-gallon increases in Indiana and Minnesota rank in the nation’s top 10 largest increases as every state in the region posted double-digit increases during this same time period.
Earlier this week, crude oil prices traded lower as a result of increased Iranian oil exports and reports of increased U.S. drilling in an effort to capitalize on OPEC production cuts and gain market share. Also impacting markets are reports of increased U.S. rig counts. According to a report from Baker Hughes, U.S. drillers added four more rigs, bringing the total U.S. rig count to 529.
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Increased oil production by the U.S. may keep a temporary cap on prices, but traders will continue to monitor how OPEC cuts and increased Iranian exports impact the market. At the end trading last week on the NYMEX, closed up 23 cents to settle at $53.99 per barrel.