The national average for regular gas fell 3 cents a gallon the past week, according to the AAA Daily Fuel Gauge Report, but supply and refinery issues continued to cause larger regional price fluctuations. Pump prices fell by double digits in the Great Lakes area as gasoline production returned to normal levels after a recent spate of refinery problems, but motorists in the Great Plains and Rocky Mountain areas saw prices rise several cents.
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GasBuddy.com reported that an outage at a Phillips 66 refinery in Borger, Texas, was causing price increases as far away as Minnesota, where the state average rose 10 cents to $2.76 a gallon. It also bumped up prices in North Dakota, Colorado, Iowa, Oklahoma and other states.
In the Great Lakes area, though, motorists were seeing significant savings. AAA said statewide averages the past week fell by 11 cents a gallon in Illinois and Michigan, 12 cents in Indiana and 16 cents in Ohio.
The average for regular gas in California, which had been walloped by a 74-cent-per-gallon spike the previous week, was unchanged at $3.86. In the Los Angeles area, which was hardest hit by the increase, the average price for regular gas eased by 6 cents the past week to $4.22.
Southern California's price spike was caused by a confluence of events. At the same time demand for gas increased for the summer driving season, the supply of imported oil to refineries dried up. In addition, some refineries continued to be plagued by production problems. In its weekly update, the Energy Information Administration said refineries were running at less than 92 percent of capacity on the West Coast, compared with nearly 98 percent in the Midwest, where prices were falling.
AAA reported early Thursday that the national average for regular gas was $2.74, 5 cents lower than a month ago and 82 cents less than a year ago. Diesel fuel declined by 2 cents the past week to $2.81. That is 7 cents less than a month ago and $1.07 less than on July 23, 2014.
California remained the state with the highest gas prices, followed by Alaska, $3.48; Hawaii, $3.33; and Nevada, $3.26. Oregon and Washington also averaged more than $3.
The lowest prices were in the Southeast, led by South Carolina at $2.36 and Alabama at $2.39. Average prices fell 5 cents in South Carolina and 7 cents in Alabama the past week. Arkansas, Louisiana, Mississippi and Tennessee also averaged less than $2.50.
As recent events have shown, supply and refinery issues can cause significant short-term price changes, but lower oil prices could lead to at least small savings at the pump down the road. U.S. oil was trading at less than $50 a barrel Thursday, nearly $2 less than a week ago. As a rule of thumb, a $1 change in the per-barrel price of oil translates into roughly a 2.5-cent change in the per-gallon price of gas a couple of weeks later.
A deal reached last week between the U.S., other major global powers and Iran to limit Iran's nuclear capabilities was driving oil prices down. AAA noted that Iran has the world's fourth-largest oil reserves, and prior to economic sanctions was one of OPEC's largest producers. If Iran complies with the agreement, it will be allowed to resume oil exports, which would add to an already-abundant global supply.
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