Gas Prices Drop to Six-Month Low

Drivers are paying 15 cents less for gas than this time last month.

This week, pump prices in seven Great Lakes and Central states are showing some of the biggest month-over-month decreases.

The cheaper pump prices come as regional refinery maintenance season begins to wrap-up, and are in-line with the national trend, according to AAA. On the week, Ohio is one of four states in the region to land on the top 10 list of largest changes in the country (-12 cents).

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Gasoline inventory plummeted by 2.5 million barrels this week, bringing stocks to the lowest level of the year at 47 million barrels according to Energy Information Administration (EIA) data. Typically, a large draw and low supply levels would push prices higher. However, the region saw lots of volatility in gas prices throughout the summer and early fall, which is continuing.

At $2.76, the national gas price average is at its cheapest in six months. On the week, motorists in every state except Hawaii are paying as much as a nickel less to fill-up. Today’s national average is six cents less than a week ago, 15-cents less than a month ago—but still 24-cents more than a year ago.

This price drop is happening at a time that analysts previously thought prices would likely increase, as the White House’s re-imposes sanctions on Iran – some of which will target the country’s energy sector and impedes its ability to export oil.

However, in May when the decision was announced (to take effect in November), the market reacted quickly with crude oil prices spiking as high as $77/barrel during the summer. At the same time, Iran’s exports began to dip.

With the market anticipating and reacting to the pending Iran sanctions throughout the summer, motorists may have seen the worst in terms of retail prices for the year. If the crude oil market remains steady, gas prices are likely to continue to fall in the near-term, though any unforeseen factors could disrupt this trend and cause an upward shift in crude oil prices.

Oil prices moved lower last week as total domestic crude inventories grew by 3.2 million barrels, according to the EIA’s latest weekly petroleum status report. Stocks now sit at 426 million barrels, which is 28.9 million fewer than this time last year, but the highest level since mid-June. Six consecutive weeks of steady growth in crude inventories has helped to check excessive increases in crude prices.