Drivers paid an average of $2.2021 a gallon for regular gasoline at U.S. pumps last week, the lowest level for this time of year since 2009, according to Lundberg Survey Inc.
Prices dropped 26.92 cents in the three-week period to Jan. 9 and are $1.14 a gallon below year-ago levels, according to the survey, which is based on information obtained at about 2,500 filling stations by the Camarillo, California-based company.
Retail gasoline fell after crude oil prices dropped below $50 for the first time since 2009 as OPEC members said they wouldn’t reduce output to bolster prices that have dropped by more than half since June. U.S. stockpiles of gasoline at 237 million barrels were the highest since 2011 in the week ended Jan. 2, according to government data. Refineries across the nation ran at nearly 94 percent of operable capacity.
“The prime mover for gasoline prices was lower crude oil,” Trilby Lundberg, the president of Lundberg Survey, said in a telephone interview. “We also have swollen supplies and refinery utilization rates are very high.”
Gasoline at the pump is at the lowest since April 2009, when prices were $2.0549 a gallon, Lundberg said. Over the last five years, prices averaged $3.17 a gallon in early January.
The highest price for gasoline in the lower 48 states among the markets surveyed was in San Francisco at $2.66 a gallon, Lundberg said. The lowest price was in Albuquerque, New Mexico, where customers paid an average $1.76 a gallon. Regular gasoline averaged $2.54 a gallon on Long Island, New York, and $2.59 in Los Angeles.
West Texas Intermediate crude, the U.S. benchmark priced in Cushing, Oklahoma, declined $8.16, or 14 percent, to $48.36 a barrel on the New York Mercantile Exchange in the three weeks to Jan. 9. Prices have fallen 56 percent since June 20.
U.S. oil output rose to 9.13 million barrels a day in the week ended Jan. 2, after reaching 9.14 million Dec. 12, the highest level in weekly Energy Information Administration data dating back to 1983. U.S. production has increased 66 percent in five years as companies have used horizontal drilling and hydraulic fracturing to tap into hydrocarbon-rich layers of underground shale rock.
Members of the Organization of Petroleum Exporting Countries, such as Saudi Arabia and the United Arab Emirates, have said the group won’t curb output to halt the rout in prices. The U.A.E. won’t cut production no matter how low prices fall, Yousef Al Otaiba, the country’s ambassador to the U.S., said at a Bloomberg Government lunch in Washington Jan. 8.
Gasoline costs for the average American household are expected to be the lowest since 2004 because of falling prices and more fuel-efficient cars and trucks that reduce the number of gallons used to travel a given distance, according to the EIA.
Refineries processed 16.4 million barrels of oil a day in the week of Jan. 2, the highest seasonal level in records dating back to 1989.
Gasoline stockpiles grew 8.12 million barrels, or 3.5 percent, during the same time period, EIA data show. Demand over the four weeks ended Jan. 2 reached 9.33 million barrels a day.
Gasoline futures on the Nymex fell 23.63 cents, or 15 percent, to $1.3232 a gallon from Dec. 19 to Jan. 2.
In coming months, consumers may see smaller price declines in gasoline, Trilby said. Fuel prices slid 24.68 cents in the two weeks to Dec. 19 and 12.35 cents in the 14 days to Dec. 5, according to Lundberg survey data.
“Retail price declines will soon be losing momentum,” Lundberg said. “Any further price declines will probably be a lot smaller than what we’ve been seeing.”