The U.S. average retail price for regular gasoline was $2.51/gallon (g) on August 31, the lowest price for the Monday before Labor Day since 2004, and 95¢/g lower than the same time last year. Declines in crude oil prices are the main driver behind falling U.S. gasoline prices. Lower crude oil prices reflect concerns about economic growth in emerging markets, expectations of higher oil exports from Iran, and continuing actual and expected growth in global crude oil inventories.
The U.S. average retail gasoline price increased 47¢/g since the last week of January, when it was $2.04/g, driven by rising crude oil prices earlier in the year, strong demand during the summer driving season, and unplanned refinery outages on the West Coast and more recently in the Midwest.
On a regional basis, average gasoline prices range from $3.16/g on the West Coast to $2.20/g in the Gulf Coast. Gasoline on the West Coast, particularly in California, continues to be in short supply, and California continues to have the highest price among states surveyed in EIA’s weekly Gasoline and Diesel Fuel Update. As of Monday (August 31), gasoline prices averaged $3.34/g in California and $3.55/g and $3.24/g in Los Angeles and San Francisco, respectively.
Although gasoline prices in the Midwest have fallen in recent weeks, an unplanned outage of the BP refinery in Whiting, Indiana, previously caused retail prices in that region to increase 60¢ per gallon on August 17. Gasoline prices in Chicago and Cleveland now average $2.95/g and $2.31/g, respectively.
The Gulf Coast region, where much of the nation’s petroleum refinery capacity is located, continues to have some of the lowest-priced gasoline in the nation, averaging $2.20/g for the region and $2.21/g in Houston.
As fall approaches and U.S. driving levels are lower, reduced gasoline demand, shifts to less costly winter specifications for gasoline, and reduced crude oil purchases by refineries undergoing seasonal maintenance have the potential to put downward pressure on crude oil and gasoline prices. In the August Short-Term Energy Outlook, EIA forecasts U.S. regular gasoline prices to decline to an average of $2.11/g during the fourth quarter of 2015, and projects an annual average retail gasoline price of $2.41/g for 2015.
Principal contributor: T. Mason Hamilton