U.S. pump prices at highest level since 2014; Arkansan drivers pay least to fill up tank

Rising international crude oil futures lifted gas prices to their highest level since 2014 with many metropolitan areas across the U.S. seeing their costs at the pump soar over $3 a gallon for regular unleaded.

The good news, however, is that Arkansas motorists are seeing the cheapest gas prices in the U.S., matching Oklahoma with average prices for regular unleaded at $2.52 per gallon. And unlike in 2014 when gas prices kept rising, AAA predicts that after the normal Memorial Day run-up leading into the traditional vacation season, pump prices will likely level out through the summer months if gasoline refiners are able to keep up with demand.

“Motorists have been spoiled the past few years with inexpensive gas prices,” said AAA spokeswoman Jeanette Casselano. “We expect prices to continue increasing, potentially another 10 cents, through Memorial Day and then will likely stabilize during the summer, with the understanding that if demand spikes, prices are likely to follow.”

Across the state, motorists in Fort Smith and Northwest Arkansas had the cheapest pump price per gallon at $2.46 and $2.49 per gallon, respectively. Drivers in the stateline cities of West Memphis and Texarkana had the highest fuel costs at $2.54 and $2.58 per gallon, respectively. Gasoline consumers in the Little Rock area, Pine Bluff, Jonesboro and Hot Springs were all paying about two cents lower or higher than the state average at $2.52 per gallon.

According to GasBuddy.com, some motorists in the Fort Smith, Bentonville and Clarksville are seeing pump prices as low as $2.34 per gallon for regular unleaded.

As of Tuesday (May 1), the national gas price average reached the highest price per gallon since November 2014 at $2.81 for a gallon of regulator unleaded. That same year, pump prices averaged $3.34, peaking at $3.70 in April and bottoming out at $2.25 in December. Although most energy analysts believe ample gasoline supplies will mute the sudden rises in pump prices, the national gas price average is still 16 cents more expensive than last month and 43 cents more expensive than a year ago.

Earlier this month, the U.S. Energy Information Administration (EIA) forecasted that U.S. drivers will pay an average of $2.74 per gallon this summer for regular unleaded, the highest average summer gasoline price in four years. The EIA’s forecast gasoline price for the summer driving season, April through September, is 26 cents per gallon higher than the average price last summer, largely reflecting changes in crude oil prices. Overall, gasoline costs in 2018 are expected to be about $2,300, or nearly $200 more per household than in 2017.

RECORD U.S. OIL PRODUCTION
Internationally, crude oil prices have been on the rise in 2018, largely because of extensions to the coordinated crude oil production reductions by the Organization of the Petroleum Exporting Countries (OPEC) in response to the near-record U.S. oil production.

A month ago, the EIA reported that average U.S. crude oil production reached 9.3 million barrels per day in 2017, an increase of 464,000 barrels per day from 2016 levels after declining by 551,000 barrels per day in 2016. In November 2017, monthly U.S. crude oil production reached 10.07 million barrels per day, the highest monthly level of crude oil production in U.S. history.

In the past decade, American crude oil production has increased significantly due to increasing output from U.S. shale plays using horizontal drilling and hydraulic fracturing. The EIA forecasts that international Brent crude prices will average $63 per barrel in 2018 and 2019. West Texas Intermediate, the benchmark U.S. crude, is expected to average about $4 per barrel lower than Brent, according to the Department of Energy research and forecasting group.

Between now and the Memorial Day weekend (May 28), motorists in Arkansas and across the U.S. should still expect pump prices to continue to rise in conjunction with an expected 1.3% increase in summer travel. The recent sudden surge can be blamed on oil prices surging to nearly $67 per barrel in early April, the highest level since 2014, said Patrick DeHaan, head of petroleum analysis at GasBuddy.

“Many will be quick to ask why this trend is happening. Ultimately, OPEC bears much of the responsibility for cutting oil production in 2017, leaving U.S. oil inventories at far lower levels than a year ago,” said DeHaan. “However, higher oil prices have also enticed U.S. producers to ramp up crude oil exports, effectively draining U.S. oil inventories at a higher pace than that oil is being replaced. In addition, recent rhetoric from the Trump Administration inflaming the situation in Syria and pushing a trade war with China is like pouring gasoline on a fire — they certainly put more upward pressure on prices.”

Nationally, motorists in the South and Southeast are paying cheaper pump price than the rest of the nation. Besides Arkansas and Oklahoma drivers seeing the cheapest gas prices, Mississippi, Louisiana and Alabama round out the lowest fuel costs between $2.54 and $2.56 per gallon.

On the other hand, pump prices on the West Coast were among the highest in the nation as gasoline stocks across the regional have declined for five straight weeks. Hawaii and California had the most expensive fuel at $3.61 per gallon, while Washington, Alaska and Nevada motorists were paying $3.29, $3.25 and $3.23, respectively, to fill up their tanks.