Gas prices fell again this week, down more than a nickel on average across the U.S. to $3.34 a gallon. Additionally, what consumers are paying at the pump is down nearly 7 cents from a month ago.
GasBuddy.com reported the average price was down 5.3 cents from last week as oil prices were down. Diesel prices also saw a drop, although not as substantial as the one for gasoline, of 1.8 cents per gallon and a price of $3.61 per gallon.
“The downturn in average gas prices continued to gain momentum last week as oil prices remained at a hefty discount. This is largely due to continued anxiety over the omicron variant and because some countries have begun issuing lockdowns, keeping motorists in some countries from consuming as much fuel,” said Patrick De Haan, head of petroleum analysis for GasBuddy, which tracks gas prices at more than 150,000 gas stations across North America.
AAA reported the national average at $3.35 a gallon, noting the last time prices were at this level was Oct. 20. Both GasBuddy and AAA noted the average was $1.19 more than this time last year.
Why is it down?
The rise of Omicron introduced some volatility into the crude oil market last week. That potential instability was amplified a bit by OPEC’s move to increase production by 400,000 barrels a day, resulting it a drop in crude oil prices.
In early Monday trading, a barrel of West Texas Intermediate crude was up $1.92 to $68.18 per barrel, some $4 below their open last Monday. Brent crude oil was up $1.94 to $71.82 per barrel in early Monday trade, nearly $5 below the same level a week ago, according to GasBuddy.
OPEC’s meeting remains “in session” allowing the group to make production output changes quickly in response to the pandemic in the weeks ahead. If Omicron forces some nations to close their borders, OPEC would likely cut production — likely sending prices higher.
According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks increased by more than 4 million barrels to 215,422 million barrels last week. Meanwhile, gasoline demand dipped from 9.3 million barrels per day to 8.8 million. The slight decrease in demand contributed to falling prices, while lower crude prices also put downward market pressure on pump prices.
Production in the U.S. is unchanged, according to Baker Hughes, with last week’s U.S. rig count was 569. While the same as it was the previous week, it is 246 rigs higher than a year ago. The Canadian rig count rose by 9 to 180, or 78 more than a year ago.
“While the Great Lakes region, the fastest to see prices respond to market fluctuations, is seeing hefty monthly declines approaching 30 cents per gallon, much of the rest of the country is lagging behind,” DeHaan said.
“But, we will see precipitous declines in the next week or two as stations continue to sell through higher priced inventory before slowly lowering their prices. It’s not impossible given the conditions that price wars, where stations lower their price significantly, could emerge as stations now have considerable room to lower prices.”
While the average across the U.S. is $3.34, that isn’t what most Americans are paying. The most common U.S. gas price encountered by motorists stood at $3.19 per gallon, unchanged from last week, followed by $2.99, $3.29, $3.09 and $3.49 rounding out the five most common prices.
The average cost at the priciest 10% of stations stands at $4.42 per gallon, up 2 cents from a week ago, while the lowest 10% average $2.80 per gallon, down 5 cents from a week ago. The median U.S. price is $3.23 per gallon, a decline of 5 cents from last week and about 11 cents lower than the national average.
The states with the lowest average prices: Oklahoma ($2.89), Texas ($2.92) and Arkansas ($2.95) while California ($4.69), Hawaii ($4.32) and Nevada ($3.94) lead the way with the highest average prices.