Demand for gas lowest since ’68; prices remain low
LEXINGTON, Ky. (WTVQ) — With Monday’s price at $1.51, Kentucky continues to be the fourth lowest gas market in the nation.
And even with OPEC announcing it is slashing production in an effort to stem the plummeting prices, it’s not likely to make a significant difference in the short run, which is good news for now for wallets.
This is down from last week’s price of $1.58 and the previous month’s average of $2.08.
In Lexington, the average gas price is down 7 cents to settle at $1.45 for regular unleaded, compared with $2.05 a month ago. Last year at this time, the average in Lexington was $2.75.
Other local gas price averages today are Richmond at $1.71, Nicholasville down a dime to $1.40, Georgetown lower at $1.36 and Frankfort now at $1.48.
Lowest demand since 1968
The national gas price average has steadily declined for seven weeks, pushing the average cheaper by 61 cents to land at $1.86 today. Since late February, U.S. demand for gasoline has decreased 44 percent to 5 million barrels a day as gasoline inventories build across the country.
“We are seeing fast and furious decline in gasoline demand. The latest data reveals demand levels not seen since spring of 1968,” said Lori Weaver Hawkins, manager, public and government affairs, AAA Blue Grass. “Every U.S. region is seeing builds in gasoline inventories and crude storage, which is just driving pump prices even lower.”
On Sunday, the Organization of the Petroleum Exporting Countries plus (OPEC+), led by Saudi Arabia, announced historic global crude productions cuts—nearly 10 million barrels per day in May and June.
“While the production cut is historic, it’s likely to not have an immediate impact on pump prices, given the ongoing impact the COVID-19 pandemic continues to have on crude oil prices and gasoline demand,” added Weaver Hawkins.
At $1.86, Monday’s national average is 6 cents less than last week, 44 cents cheaper than a month ago and nearly $1 less than a year ago.
Kentucky continues to have some of the cheapest gasoline in the nation after seeing rapid declines the past few weeks.
- The nation’s top 10 least expensive markets are: Wisconsin ($1.30), Oklahoma ($1.40), Ohio ($1.46), Kentucky ($1.51), Michigan ($1.52), Arkansas ($1.53), Indiana ($1.54), Iowa ($1.55), Mississippi ($1.57) and Missouri ($1.58).
- The nation’s top 10 largest weekly decreases are: Alaska (-19 cents), Idaho (-17 cents), Wisconsin (-13 cents), Iowa (-11 cents), South Dakota (-11 cents), Arkansas (-11 cents), Wyoming (-11 cents), Minnesota (-10 cents), Utah (-10 cents) and Oregon (-9 cents).
Central region continues to see price drops
With this week’s pump price declines, Illinois ($1.88) is in the only state in the central region with an average more than $1.75/gallon. Wisconsin ($1.30) carries the cheapest average in the region and country, but Kentucky and Ohio are also among the four cheapest markets across the country.
Regional gasoline stocks measure at 60.5 million barrels—the highest levels in 14 months. The Energy Information Administration (EIA) reports for the week ending April 3, stocks built by 2.6 million barrels. Gas prices will continue to push cheaper in the week ahead, even with a number of regional refiners announcing cuts to combat declining demand.
Oil Market Dynamics
At the end of Thursday’s formal trading session, West Texas intermediate, used as a benchmark in oil pricing, decreased by $2.33 to settle at $22.76 per barrel. Crude prices were volatile last week, during the run-up to OPEC’s historic agreement with its allies, including Russia. The group met to discuss global crude productions cuts of up to 9.7 million b/d for May and June 2020. Under the new production reduction agreement, OPEC and its allies expect total global oil cuts to amount to more than 20 million b/d or 20 percent of global supply. Effective May 1, the production cuts are expected to ease in June, but some restrictions will remain in place through April 2022.
Crude prices will likely remain volatile this week, as the market assesses if the production cuts are sufficient to hold back growing global crude inventories as COVID-19 continues to push down demand.
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.