A publication of the Kentucky Center for Public Service Journalism

AAA: Kentucky average gas price now at 30 cents less than one year ago; increases possible

Kentucky’s average gas price dropped 10 cents in the past week to land at $2.06, among the greatest price drops in the nation over the past week. The current Kentucky average gas price is 30 cents less than a year ago.

Nearly 20 percent of states are currently enjoying prices below $2.00 per gallon. Nationally, retail averages have dropped ­­­83 of the past 90 days. The national average for regular unleaded gasoline currently sits at $2.30 per gallon, which is six cents less than one week ago, 24 cents less than one month ago and 16 cents less than at the same time last year.

Heading into 2019, gasoline demand is expected to dwindle during the month of January, an expected change following the busy holiday travel season. At the same time, OPEC will begin production cuts on January 1, with hopes that the shift in global supply will push oil prices higher. The effectiveness of the cuts will likely not be known until later in the first quarter.

“All eyes are on OPEC to kick off the year,” said Lori Weaver Hawkins, public and government affairs manager, AAA Blue Grass. “Many are waiting to see if they stick to their promise to cut crude production by 1.2-million barrels per day and if the proposed cuts will be enough to restore balance to the market.”

Over the past few years, OPEC and partnering countries have demonstrated a strong resolve to comply with proposed cuts in production. It is likely that the cartel will reconvene in April, and if there is a need to further balance global supply and demand, OPEC will likely tweak current production numbers at that meeting.
 

Prices Below $2 In Some Areas of the Commonwealth

Following some ups and downs the past couple of weeks, average gas prices fell over the Christmas holiday to show declines week over week across all of Kentucky. Last week’s average decline of 10 cents put Kentucky among the top 10 greatest price declines in the nation.

After hitting below the $2 mark at the top of the month, Lexington saw prices pop up before dropping 20 cents in the past week to settle back down at $2.03, a full 37 cents less than a year ago this time. Owensboro, Henderson and the Elizabethtown-Fort Knox areas are all averaging below $2 per gallon.

Kentucky Average Gas Prices, December 27:


 
States in the Central U.S. See Significant Gas Price Drops

Prices have dropped significantly across the central area of the U.S., with Ohio (-15 cents), Indiana (-15 cents), South Dakota (-12 cents) and Michigan (-12 cents) topping the list of largest weekly declines. Missouri ($1.87) and Oklahoma ($1.95) have both dropped below $2 per gallon. Drivers in Iowa ($2.01) and Ohio ($2.01) will likely see prices below $2 to start the New Year.

According to the latest Energy Information Administration (EIA) report, gasoline inventories in the Midwest region jumped by 1.7 million barrels to 51.4 million barrels for the week ending on December 14. Total regional inventories are now 3.6 million barrels higher than this same time last year.

Quick Stats on the Nation As of Thursday, Dec. 27:

• The nation’s top 10 largest weekly decreases are: Ohio (-15 cents), Indiana (-15 cents), South Dakota (-12 cents), Michigan (-12 cents), Montana (-11 cents), Kentucky (-10 cents), Illinois (-10 cents), Wisconsin (-10 cents), Wyoming (-9 cents) and Idaho (-9 cents).
• The nation’s top 10 least expensive markets are: Missouri ($1.87), Oklahoma ($1.95), Arkansas ($1.97), South Carolina ($1.97), Texas ($1.97), Alabama ($1.97), Mississippi ($1.97), Louisiana ($1.98), Kansas ($1.99) and Iowa ($2.01). 

Oil Market Dynamics

At the close of Friday’s formal trading session on the NYMEX, WTI decreased 29 cents to settle at $45.59. Oil prices mostly fell last week, reaching their lowest since the third quarter of 2017, as market observers have concerns that the global crude market is oversupplied.

Moreover, according to the latest weekly petroleum status report from the EIA, total domestic crude inventories took a slight step back last week. At 441.5 million barrels, crude inventories fell by 500,000 bbl. When compared to last year at this time, combined inventories across the country are still 5 million barrels higher this year.

To reduce the oversupply of crude globally, earlier this month OPEC and non-OPEC producers, including Russia, announced that beginning in 2019, they will reduce crude production by 1.2 million b/d (for an initial six month period). This move could drive crude oil prices up, and in turn drive gas prices higher in the New Year.

AAA offers these tips to motorists to save at the pump:

• If your vehicle’s engine does not require premium or mid-grade fuel, don’t buy it.  Using anything other than regular grade is simply a waste of money.
• Don’t top off your gas tank. Stop filling after the automatic nozzle shuts off the second time.
• If you have to replace a gas cap, make sure it is the right one for your car. An ill-fitting cap will increase emissions and trigger the “check engine” light.
• Keep track of gas mileage. If you notice a sudden decrease in fuel economy, have your vehicle checked by a technician to ensure it is operating properly.
• Check for proper tire pressure, which can fluctuate greatly with changing temperatures.
• 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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