After cresting above $123 per barrel shortly after Russia’s invasion of Ukraine, the price of crude oil has gradually fallen below $110. If this trend holds, it may remove some of the extreme upward price pressure consumers have found at the pump, but not all. The national average price of a gallon of gas hit $4.33 on Friday, March 11, before falling a penny and holding throughout the weekend and Monday at $4.32.
“It bears reminding that the cost of oil accounts for about 50% of what drivers pay at the pump,” said Andrew Gross, AAA spokesperson. “This war is roiling an already tight global oil market and making it hard to determine if we are near a peak for pump prices, or if they keep grinding higher. It all depends on the direction of oil prices.”
According to new data from the Energy Information Administration (EIA), total domestic gasoline stocks decreased by 1.4 million bbl to 244.6 million bbl last week. Meanwhile, gasoline demand rose slightly from 8.74 million b/d to 8.96 million b/d. The increase in gas demand and a reduction in total supply contribute to rising pump prices. But, increasing oil prices play the lead role in pushing gas prices higher. Consumers can expect the current trend at the pump to continue as long as crude prices climb.
Today’s national average for a gallon of gas is $4.32, which is 26 cents more than a week ago, 84 cents more than a month ago, and $1.47 more than a year ago.
The nation’s top 10 largest weekly increases: Utah (+51 cents), Arizona (+48 cents), California (+40 cents), Idaho (+40 cents), Nevada (+36 cents), Florida (+34 cents), Alaska (+33 cents), Georgia (+32 cents), New Mexico (+29 cents) and Washington (+29 cents).
The nation’s top 10 most expensive markets: California ($5.74), Nevada ($4.95), Hawaii ($4.95), Washington ($4.73), Oregon ($4.73), Alaska ($4.72), Arizona ($4.60), Illinois ($4.56), Washington, D.C. ($4.50) and Connecticut ($4.46).
Oil Market Dynamics
At the close of Friday’s formal trading session, WTI increased by $3.31 to settle at $109.33. Crude prices surged then eased last week in response to President Biden announcing a ban of Russian energy imports, including crude oil. Crude prices have eased as the market continues to find replacement barrels of oil and further supply growth for the tight market becomes apparent. However, the market remains volatile and additional disruptions or escalation of the current crisis in Ukraine could cause prices to surge again this week. Additionally, EIA reported that total domestic crude stocks decreased by 1.8 million bbl last week to 411.6 million bbl. The current stock level is approximately 17% lower than at the end of February 2021, contributing to pressure on domestic crude prices.
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