Kentucky gas prices ride summer see saw

LEXINGTON, Ky. (WTVQ) – Gas prices in Kentucky shifted into reverse over the last seven days, but barely, according to AAA.

Although crude oil inventories have fallen, gasoline inventories have risen, possibly contributing to the decline in some areas.  Kentucky is one of 12 states where gas is cheaper than seven days ago.  Twenty seven states experienced higher prices and 12 others stayed the same.  The West Coast, Rockies and Midwest regions are seeing the bulk of the increases at the pump.

“Prices at the pump took a slight dip this week,” said Lilla Mason, AAA spokesperson. “However as we get closer to Labor Day and demand and production rates grow, AAA predicts drivers will likely see some of the highest prices at the pump this year.”

CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)

Oil market dynamics

Last week, the EIA published a report that pointed to a revised record gasoline demand at 9.842 million b/d for the week ended on July 28. The demand figure for the week ending on August 4 noted a small pullback, but overall the last four weeks of gasoline demand have been on par with that of a year ago. The recent good news for gasoline demand does not end there, as final monthly renderings for April and May pointed to record highs. If the trend holds, final readings for June and July are likely to follow suit, confirming that gasoline production by U.S. refiners and blenders has been running near record levels over the first seven months of 2017, according to AAA.

With strong gasoline production levels and seasonal demand staying on track, drivers will likely see prices continue to climb across the country, according to AAA.  In fact, as OPEC seeks to re-double its efforts to rebalance the global oil market, any additional steps from it to curb growth in production may lead to higher oil prices. At a meeting in Abu Dhabi last week with OPEC and non-OPEC producers – all members of a pact that has agreed to cut production by 1.8 million barrels per day (bpd) until March 2018 – the group decided to take action, including curtailing exports, to comply more fully with the agreement. If those measures meet full success, it will likely lead to higher prices at the pump, according to AAA.