Pump prices are at their seasonal lows as millions of Americans head out on holiday trips. Prices are down week-over-week in 48 states, including Oregon. However, the national average has ticked up overnight, signaling that it could have bottomed out. The major drivers are higher crude oil prices and an increase in demand for gas. We may stay near these numbers until early 2024. For the week, the national average for regular loses six cents to $3.08 a gallon. The Oregon average also drops six cents to $3.85.
“Pump prices at seasonal lows are sleighing it at the pumps in time for holiday travel. This year is shaping up to the second-busiest ever for holiday travel and those driving will have some extra jingle in their pockets thanks to relatively low gas and diesel prices,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “However, higher crude oil prices and an increase in demand for gasoline could put some upward pressure on pump prices over the holidays.”
AAA projects 2023 to be the second-busiest for holiday travel since 2000 when AAA began tracking holiday travel, only behind 2019. AAA projects 115.2 million Americans (33.8% of the population) will travel 50 miles or more for the Christmas and New Year holidays. This is up 2.2% from 2022. About 1.63 million Oregonians will pack their sleighs for a holiday trip. Find all the details and tips for travelers in the AAA holiday travel news release.
The national average is at its lowest price since June 2021. The Oregon average is at its lowest price since last February. Prices may have bottomed out for the season and could remain near their current prices until early 2024. Pump prices often start to increase again in the first quarter.
Those driving to their holiday destinations will find gas prices similar to last Christmas, when the national average for regular gas was $3.10 and the Oregon average was $3.77.
The national average for regular had been steadily falling since reaching its year-to-date high of $3.88 on September 18. The Oregon average has been moving lower since reaching its year-to-date high of $4.77 on August 30. However, the national average ticked up more than a cent overnight, signaling that it may have bottomed out for the season.
Most Oregon counties have averages below $4 a gallon. The only counties with averages at or above $4 are:
Clackamas $4.01
Coos $4.15
Curry $4.39
Grant $4.25
Harney $4.05
Lake $4.06
Multnomah $4.21
Sherman $4.20
Wallowa $4.01
Washington $4.01
Crude oil prices have risen in the last few days after attacks on commercial vessels in the Red Sea. Some shipments have been halted after ships were attacked by rebels in Yemen. The U.S. is part of an international naval operation to protect ships in the area, which is an important shipping lane between Europe and Asia.
Crude prices ticked up in late November as OPEC+ (Organization of the Petroleum Exporting Countries and allies such as Russia) announced additional voluntary oil production cuts of 900,000 barrels a day, and Saudi Arabia said it would continue its cuts of a million barrels a day through March. Crude oil prices jumped ahead of the announcement, but then fell and have remained in the upper $60s to lower $70s.
Crude oil prices were volatile at the start of the conflict between Israel and Hamas in October. Fears that the conflict could escalate across the Middle East sent crude oil prices near $90 per barrel in October. Crude prices fell into the $70s on November 7, and dipped below $70 last week. While Israel and the Palestinian territory are not oil producers, there’ve been concerns that the conflict could spread in the Middle East, which could potentially impact crude production in other oil-producing nations in the region.
Crude oil prices tend to rise when there are geo-political events involving oil producers. Crude prices spiked after the invasion of Ukraine by Russia last year because Russia is one of the world’s top oil producers, behind the U.S. and Saudi Arabia. Crude prices also surge on news of production cuts by major oil producers. Crude oil prices spiked above $90 per barrel in mid-September, the highest price since last November, in response to the announcement from Saudi Arabia and Russia that they would keep their production cuts in place through 2023. The cuts are one million barrels a day by Saudi Arabia and 300,000 barrels a day by Russia.
Gas prices normally decline in the fall, in part due to a drop in demand for gasoline compared to the summer months and the switch from summer-blend gas to winter-blend gas. Winter-blend gas is cheaper to produce than summer-blend fuel as it contains ingredients such as butane, so gas prices normally fall when the switch occurs. Summer-blend gas helps reduce emissions from gasoline during the warm summer months. More info on summer- and winter-blend gasoline can be found at the EPA website. The switch occurs on September 15 except California, which normally keeps summer-blend gasoline until October 31. This year, California allowed the switch to occur earlier because of refinery issues in that state that sent pump prices soaring on the West Coast in late September.
Crude oil is trading around $74 today compared to $69 a week ago and $76 a year ago. So far this year, West Texas Intermediate has ranged between $63 and $94 per barrel. Crude reached recent highs of $123.70 on March 8, 2022, shortly after the Russian invasion of Ukraine, and $122.11 per barrel on June 8, 2022. The all-time high for WTI crude oil is $147.27 in July 2008.
Crude oil is the main ingredient in gasoline and diesel, so pump prices are impacted by crude prices on the global markets. On average, about 57% of what we pay for in a gallon of gasoline is for the price of crude oil, 7% is refining, 22% distribution and marketing, and 14% are taxes, according to the U.S. Energy Information Administration.
Demand for gas in the U.S. increased from 8.47 to 8.86 million b/d for the week ending December 9, according to the U.S. Energy Information Administration (EIA). This compares to 8.26 million b/d at the same time last year. Meanwhile, total domestic gasoline stocks increased slightly to 224 million bbl.
Higher demand typically helps push pump prices higher, as do higher oil prices. So pump prices could climb a bit over the holidays or stay relatively stable.
Quick stats
Oregon is one of 47 states and the District of Columbia with lower prices now than a week ago. Michigan (-14 cents has the biggest weekly drop. Delaware (+2 cents) and Iowa (+1 cent) are the only states with week-over-week increases. The average in South Carolina is flat.
After 20 weeks, Hawaii ($4.69) bumps California ($4.60) as the state with the most expensive gas in the nation. Washington ($4.19) is third. These are the three states with averages at or above $4, compared to four states a week ago. This week 18 states and the District of Columbia have averages in the $3-range. Twenty-nine states have averages in the $2 range this week.
The cheapest gas in the nation is in Texas ($2.60) and Mississippi ($2.63). No state has had an average below $2 a gallon since January 7, 2021, when Mississippi and Texas were below that threshold.
The difference between the most expensive and least expensive states is $2.10 this week, same as a week ago.
Oregon is one of 49 states and the District of Columbia with lower prices now than a month ago. The national average is 23 cents less and the Oregon average is 27 cents less than a month ago. Indiana (-52 cents) has the largest monthly drop. Hawaii (-4 cents) has the smallest. Georgia (+16 cents) is the only states with a month-over-month increase.
Oregon is one of seven states with higher prices now than a year ago. The national average is six cents less and the Oregon average is half a cent more than a year ago. Utah (-58 cents) has the largest yearly decrease. Washington (+24 cents) has the largest yearly increase.
