Pump prices continue to tumble as fears of a possible COVID-19 global economic slowdown pushed oil prices into the mid $60s per barrel—a price not seen since August.
According to AAA’s Monday report, another factor helping to ease upward pricing pressure was the decision by OPEC and its oil-producing allies not to cut production. The national average for a gallon of gas dipped 4 cents on the week to $3.35. The last time gasoline prices were this low was on Oct. 20.
“Consumers may be catching a break at the pump right now, but it’s not for a very good reason,” AAA spokesperson Andrew Gross said in a statement. “A potential COVID-19 induced economic slowdown hurts everyone and could prompt OPEC to slash production if oil prices drop too low.”
On Thursday, OPEC and its allies—a group referred to as OPEC+—announced it would stick to its plan, for now, to raise production by 400,000 barrels a day in January. The move was likely in response to the Biden administration’s call to increase supply to tame high fuel prices, AAA reported.
Today’s national average of $3.35 is seven cents less than a month ago and $1.19 more than a year ago, the AAA release stated.
Locally, Florida prices have steadily increased starting the first week of October and through the end of October when it tied for the highest gas price increase nationwide. The high cost at the gas pump prompted Florida Gov. Ron DeSantis to propose a $1 billion gas relief plan on Nov. 22.
Quick AAA Stats
The nation’s top 10 largest monthly decreases: Indiana (−21 cents), Michigan (−18 cents), Ohio (−17 cents), Washington, D.C. (−15 cents), Missouri (−14 cents), Texas (−13 cents), Iowa (−13 cents), Kansas (−12 cents), Oklahoma (−12 cents), and South Carolina (−12 cents).
The nation’s top 10 most expensive markets: California ($4.68), Hawaii ($4.34), Nevada ($3.91), Washington ($3.87), Oregon ($3.78), Arizona ($3.77), Alaska ($3.71), Idaho ($3.65), Utah ($3.62) and Pennsylvania ($3.57).
Florida ranks 27th out of the 50 states with average gas prices at $3.30 per gallon.
Oil Market Dynamics
In the AAA release, at the close of last week’s formal trading session, West Texas Intermediate (WTI) decreased 24 cents to settle at $66.26. Crude oil prices decreased last week due to uncertainty of the COVID-19 omicron variant’s impact on demand and the announcement that OPEC+ will ramp up production by 400,000 barrels a day in January.
Additionally, the Energy Information Administration (EIA) reported minimal draws on U.S. commercial crude oil inventories, which decreased by 900,000 barrels of crude oil (bbl) from the previous week to 433.1 million barrels. This week, crude oil prices could continue to fluctuate. Market watchers will keep a close eye on crude oil inventories and the impact that the omicron variant has on demand.