LEXINGTON, Ky. — For 66 days, the national gas price average held below the $2/gallon mark, dropping as far as $1.76. But, in the past week, the national average has inched up to $2.03. That increase is evident in Kentucky as well, where the current average is $1.94, up a dime since a week ago. The Bluegrass region in particular has seen gas prices climb at twice that rate in many communities.
U.S. gasoline demand continues to show increasing strength. The Energy Information Administration’s (EIA) latest reading shows a 4 percent weekly increase at 7.5 million barrels per day. That is the highest demand level since states began issuing stay-at-home orders in mid-March.
Lowest prices for early June since 2004
Despite the consistent increases at the pump, prices are still significantly cheaper year-over-year. In fact, during the first week of June the past five years, gas prices have typically averaged $2.81.
“The beginning of June has not seen gas prices this low since 2004,” said Lori Weaver Hawkins, public and government affairs manager, AAA Blue Grass. “As crude oil prices trend higher and gasoline demand increases, Americans will see gas prices push more expensive, but this summer should be cheaper than last.”
Today’s average in Kentucky is up 35 cents from a month ago, but still considerably lower than the average of $2.56 seen a year ago. In Lexington, the average price is now $1.98, an 18 cent climb from last week and 41 cents higher than last month.
In Nicholasville, the average price is up 18 cents from last week, landing at $1.95, while the average jumped up 20 cents in Georgetown at $1.99. Versailles is also up 20 cents to hit the $2 mark and Winchester’s average today is up 19 cents to hold at $1.99. Richmond is at $1.99, up nearly 20 cents from just a week ago.
The nation’s top 10 largest weekly increases: Colorado (+13 cents), Indiana (+12 cents), Missouri (+11 cents), Montana (+10 cents), Kentucky (+10 cents), Michigan (+9 cents), Kansas (+9 cents), Alabama (+8 cents), Tennessee (+8 cents) and Alaska (+8 cents).
The nation’s top 10 least expensive markets: Mississippi ($1.66), Texas ($1.69), Louisiana ($1.70), Arkansas ($1.71), Alabama ($1.72), Oklahoma ($1.73), South Carolina ($1.73), Missouri ($1.76), Kansas ($1.77) and Virginia ($1.79).
Great Lakes and Central States
Indiana (+12 cents), Missouri (+11 cents), Kentucky (+10 cents) and Kansas (+9 cents) saw the largest pump price increases in the Great Lakes and Central states region. They also land on the top 10 list for largest weekly increases in the country. All other states in the region saw increases, but they were only 2 to 4 cents.
Illinois ($2.29) ranks as the 7th most expensive state average in the country and the highest in the region. On the other end of the spectrum, Missouri ($1.76) and Kansas ($1.77) rank as the 8th and 9th least expensive averages, respectively.
Gasoline stocks in the region drew by about 600,000 barrels to push total stocks down to 54.4 million barrels, according to EIA data. The small draw, combined with mostly steady refinery rates, will likely help to keep any price increases in the week ahead minimal.
Oil Market Dynamics
At the end of Friday’s formal trading session, West Texas Intermediate (WTI) increased by $2.14 to settle at $39.55 per barrel. At the end of last week, crude prices increased amid market optimism that the Organization of the Petroleum Exporting Countries (OPEC) and other major crude exporters, including Russia, would extend their 9.7 million barrels per day production reduction agreement into July.
Over the weekend, the cartel and its partners agreed to extend the deal for July, which is expected to reduce global crude supplies by nearly 10 percent while global crude oil demand remains low due to COVID-19. Crude prices will likely increase this week in reaction to OPEC’s announcement.
Additionally, approximately one third of crude oil and natural gas production in the Gulf of Mexico has been halted, as Tropical Depression Cristobal makes landfall in Louisiana. The storm is expected to bring tropical-storm force winds and potential storm surge and flooding to the state’s coastal areas.
There is no estimate for when the facilities will resume operations. Facilities will likely be inspected after the storm has passed to determine if personnel can return safely. Any impact on domestic crude prices will depend on how long production remains shuttered and the extent of damage caused by the storm.
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.