Drivers on the West Coast and nationwide are enjoying a second week of double-digit decreases in pump prices -- and hurricane, now Superstorm Sandy should do little if anything to reverse that long-term trend, AAA Oregon/Idaho said Tuesday.
The national average for regular unleaded falls 11 cents this week to $3.53 while Oregon’s statewide average drops 12 cents to $3.84.
"But Hurricane Sandy could send retail gas prices higher in the East temporarily due to decreased production in the wake of the storm,” said AAA Oregon/Idaho Public Affairs Director Marie Dodds.
“Unlike Hurricane Isaac earlier this year and many other hurricanes, Sandy is impacting an area that is a major consumer of gasoline rather than a major producer," Dodds said.
"There are isolated reports of price hikes and gas stations running out of gas. But the demand destruction for gasoline is expected to more than offset the drop in production.”
Thousands of flights have been canceled, businesses and schools are closed, millions of people are without power and tens of millions of people are staying home in the aftermath of Sandy.
Gasoline demand at this time of year is usually near 8.5 million bpd (barrels per day) but is likely to be at least 1 million bpd lower for the next several days.
This drop in demand has the potential to pressure pump prices lower, especially in regions such as the Gulf Coast, which normally supply product to the East Coast but will not feel the direct effects of the storm.
“The average prices in some Northeastern states could rise a bit higher this week, but once refineries come back online and distribution resumes, prices should start to head down again,” Dodds added.
Assuming a smooth restart to production and distribution following Hurricane Sandy, AAA expects that gas prices across the country will continue to drop as we start November and Thanksgiving approaches, and will move even lower towards the end of the year.
Barring unforeseen events, AAA expects that the national average is likely to be between $3.40 to $3.50 a gallon when Americans head to the polls next week and between $3.25 and $3.40 by Thanksgiving. Prices in Oregon may be in the $3.70 to $3.80 range in the next couple weeks and in the $3.55 to $3.70 range by Thanksgiving.
Prior to the recent drop in the national average, regional pump prices fluctuated dramatically on a string of localized supply and distribution disruptions. In late July, pipeline and refinery issues in the Midwest pressured prices in those states sharply higher, including week-over-week increases of 38 cents or more in Michigan, Ohio, Illinois and Indiana.
As these issues were resolved in mid-August and Midwestern prices eased, state averages on the West Coast rose dramatically on news of a fire at the Chevron refinery in Richmond, California.
At the end of August and into September, prices east of the Rockies were again surging, as the impact of Hurricane Isaac impacted already low gasoline supplies approaching the seasonal shift from summer to winter-blend gasoline.
To begin October, the focus shifted back to California, where a power outage at the Exxon Mobile refinery in Torrance sent prices soaring in the west, and particularly in California where prices jumped a state-record 50 cents in the first week of October.
Adding downward pressure to retail gas prices, but once again taking a backseat to domestic supply and distribution issues, are crude oil prices, which continue to slide on global economic weakness and a somewhat stronger U.S. dollar.
At the close of Monday’s formal trading on the NYMEX, WTI (West Texas Intermediate) crude oil settled at $85.54 per barrel, down 74 cents on the day and down significantly from the recent high of $99 per barrel on September 14. Today crude is trading around $86 per barrel, same as last week. Crude prices are down about seven percent in the last month.
While the national and Oregon averages have been the highest on record each calendar day for more than two months, the gap between the current prices and the previous records continues to narrow.
Today’s national average is nearly nine cents more than the previous high for this date, $3.446, set in 2011. Today’s Oregon average is seven cents more than the previous high for this date, $3.775, also set in 2011. Just a few weeks ago, both averages were more than 30 cents higher than the previous records.
Drivers in all states and the District of Columbia continue to pay more than $3 per gallon at the pump, and three states have an average price at or above $4 a gallon, down from four last week.
Hawaii has the most expensive gas in the country for the second week in a row. Oregon, Washington and Idaho are all in the top ten most expensive states. Hawaii is most expensive at $4.34, followed by Alaska at $4.23, California at $4.14 (down 26 cents and down from second most expensive last week), New York at $3.93 and Connecticut at $3.91. After four weeks in seventh place, Oregon moves up to sixth. Washington drops from sixth to eighth most expensive at $3.81 (down 16 cents). Idaho is ninth up from 11th last week at $3.80 (down two cents). For the second week in a row, Missouri has the cheapest gas in the nation at $3.18 a gallon (down 14 cents).
Diesel prices are also declining in most markets. The national average loses a nickel to $4.06 while Oregon’s average drops seven cents to $4.16. Diesel is at or above $4 a gallon in 36 states (including the District of Columbia), down from 42 last week. Hawaii is most expensive at just below $5.00, followed by Alaska at $4.43, California at $4.36 (down nine cents and down from second place last week), Connecticut at $4.36, and New York at $4.33. Idaho is sixth at $4.29 (down three cents). Washington is 12th down from 10th last week at $4.20 (down seven cents). Oregon is 16th down from 13th last week. A year ago, the national average for diesel was $3.88 and Oregon's was $4.07.