TOPEKA, Kan. – Sept. 24, 2018 – Despite a majority of states across America experiencing falling or flat gas prices, Kansas was part of a regional trend that saw prices at the pump rise over the past week. The average cost of a gallon of regular gas in Kansas rose four cents this week to $2.70. Several Great Lakes and Central states experienced increased gas prices due to shutdowns of a half dozen refineries in the region because of maintenance issues.
“Generally this time of year, we see gas prices that trend downward, and that is the case in much of the country,” said Shawn Steward, AAA Kansas spokesman. “The refinery issues in our part of the country just go to show you that retail fuel prices are always evolving, sometimes impacted by unexpected factors and, overall, hard to predict. Kansas does still fare very well, though, with gas prices 15 cents below the national average and 12th cheapest in the nation.”
Of the 10 Kansas cities regularly highlighted by AAA Kansas (see chart below), seven saw their gas prices increase, led by Salina (+10 cents), Garden City (+6) and Wichita (+5). Hays, Kansas City, Kan. and Lawrence all saw a 1-cent decline at the pumps.
According to AAA Kansas, this week’s Kansas gas price extremes are:
HIGH: Kensington (Smith County) – $3.01
LOW: Newton (Harvey County) – $2.56
Motorists in 32 states are welcoming cheaper or stable gas prices at the start of the workweek. Today’s national gas price average is $2.85, which is the same price as last Monday, one-cent more than last month and 27-cents more expensive than this time last year.
The latest Energy Information Administration (EIA) data reports that both U.S. gasoline demand and stocks declined signaling supply and demand are in sync post the summer. This is true for most regions, except in the Great Lakes and Central region where prices are increasing due to maintenance at a handful of refineries.
While the national gas price has remained stable throughout September, the price of crude oil started to increase in the last week.
“Crude oil prices pushed past $70/bbl for three days last week,” said AAA Kansas’ Steward. “If they trend above this level for a sustained amount of time, we could see a national trend reversal in pump prices meaning it may cost more to fill-up as we get closer to the end of the year.”
Today’s national gas price extremes:
High: Hawaii – $3.78
Low: Alabama and Mississippi – $2.53
Change Over Last Year
Unlike most of the country, state gas price averages in the Great Lakes and Central region continue to trend more expensive. States in the region with the largest increase on the week: Kentucky (+6 cents), North Dakota (+5 cents), Indiana (+5 cents), Iowa (+5 cents), Minnesota (+5 cents), Illinois (+4 cents), Nebraska (+4 cents), Wisconsin (+4 cents), and Kansas (+4 cents). There was one outlier, Michigan (-5 cents), the only state to see prices drop in the last seven days.
Overall, the increase in gas prices can be attributed to planned and unplanned maintenance at half a dozen refineries in the region. In fact, total inventory in the Great Lakes and Central region sits at 52.3 million bbl according to the EIA. Despite being on par with levels this time last year, the 52 million mark is one of the lowest levels seen since Memorial Day Weekend this year. The low inventory is a contributing factor for the increasing gas prices.
Despite similar year-over-year inventory levels, some motorists in the region are paying in the neighborhood of 50-cents more to fill up compared to last September: Indiana (+58 cents), Ohio (+53 cents), Illinois (+49 cents) and Michigan (+46 cents).
Oil market dynamics
At the close of Friday’s formal trading session on the NYMEX, the WTI increased 46 cents to settle at $70.78. Oil prices jumped higher last week after EIA’s report showed another decline in oil inventories, which now sit at 394.1 million bbl. The supply drop from the previous week’s 396.2 million bbl has put another spotlight on limited global supply as fall approaches. U.S.-imposed sanctions on Iran and sharp reductions in economically stressed Venezuela are two factors driving concerns that this fall there could be major global crude supply challenges. If EIA’s report this week shows another decrease in domestic crude stocks, oil prices are likely to continue their ascent amid continuing global supply concerns.
In related news, OPEC and its partners who have worked to reduce their combined total crude output since January 2017 met on September 23 in Algiers, Algeria, to discuss compliance with their production agreement. After the meeting, OPEC’s leaders confirmed that the cartel does not intend to increase crude production in the near future to offset global supply concerns.