18:00 PM

AAA: Two-Thirds of All States See Double-Digit Pump Price Drop on the Week

Eleven States Have Gas Price Average of $2/Gallon or Less

AURORA, Ill., (March 16, 2020) – As crude oil prices trend close to $30/bbl, Americans are seeing pump prices plummet across the country. On the week, gas price averages in 35 states decreased by double-digits, pushing the national average to $2.25, the cheapest price point of the year.

"The national gas price average is 13 cents cheaper on the week and nearly 20 cents less than the beginning of the month. These are significant decreases in just 7 and 16 days," said Molly Hart, spokesperson for AAA – The Auto Club Group. "AAA expects gas prices to continue trending cheaper, with the high likelihood of the national average hitting $2/gallon before the end of March."

During this uncertain time of COVID-19, gas prices are declining despite increasing gasoline demand and decreasing U.S. stock levels.

Some of the largest weekly pump price savings in the country can be found in the Great Lakes and Central states. Eight out of the top 10 largest weekly decreases are states from the region including Indiana (-19 cents) and Illinois (-19 cents).

With a draw of 1.8 million bbl, the Great Lakes and Central states region saw its first substantial drop in gasoline stocks in two months, according to the Energy Information Administration's latest report. At 58 million bbl, stock levels remain healthy and in line with levels this time last year. If stocks were to decrease again in the coming week that would traditionally mean a pump price increase, but given current trends it's more likely gas prices would decrease.



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Click here to view current gasoline price averages

Oil Market Dynamics

Moving into this week, crude prices are likely to continue decreasing as the world grapples with how to contain the ongoing international public health crisis and associated economic challenges that could lead to a global recession. Until the price war ends and fears about COVID-19 subside, domestic crude prices are likely to remain low.

Gasoline Futures

  • Gasoline futures have lost more than 40% of value in three weeks
  • Friday's closing price was 90 cents per gallon; nearly 50 cents less than the week before, and the lowest daily settlement since December 2008.

?Crude Oil Futures

  • Crude oil lost more than 40% of its value since late February
  • A barrel of WTI crude remains in the low $30s
  • Friday's settlement was $31.73 per barrel. Just three weeks ago, crude traded in the low $50s

Major Shift in Forecasts

The EIA recently slashed its fuel price projections for 2020 and 20201, citing "significant uncertainty amid a highly volatile market".

According to the Energy Information Administration:

  • OPEC
    • Will target market share instead of a balanced global oil market.
    • Crude oil production from April-December 2020 will increase by nearly 2% through the rest of the year, and nearly 2.5% in 2021.
  • US crude oil prices for 2020
    • Will average 33% less than 2019, as declining global oil inventories put upward pressure on prices.
    • WTI crude will average $38.19 per barrel this year and $50.36 in 20201.
    • This is 35.3% less than initial forecasts back in January.
  • U.S. crude oil production
    • Will begin declining around May, due to lower oil prices.
    • EIA models suggest oil prices affect production after about a six-month lag.
    • Production could fall from 13.2 million b/d in May to 12.8 million b/d in December 2020; then fall to 12.7 million b/d in 2021.
    • The forecast decline in 2021 would mark the first annual U.S. crude oil production decline since 2016.
  • US retail gasoline prices
    • Will fall to a monthly average of $1.97/gal in April before rising to an average of $2.13/gal from June through August.
    • Will average $2.14 in 2020 - 18% less than 2019.
  • ?Jet fuel
    • Demand over the past four weeks is nearly 13% less than a year ago, due to flight cancellations.
    • This decline rivals demand figures not seen since the 9/11 attacks.

Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.

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