Gasoline prices in Arkansas and the rest of the nation jumped to a four-year high this week as weak U.S. crude inventories have led to higher oil prices as refiners switch over to winter fuels following the normal Labor Day lull.
On Monday, AAA reported that the national gas price average increased three cents on the week to $2.91 as all but seven states are paying more at the pump. Today’s national gas price average is six cents more than a month ago and 41 cents more than a year ago.
“The September switch-over to winter-blend gasoline ushered in cheaper gas prices compared to the summer, but that drop was short-lived,” said AAA spokesperson Jeanette Casselano. “Crude oil accounts for half of the retail pump price and crude is selling at some of the highest price points in four years. That means fall and year-end prices are going to be unseasonably expensive.”
According to the U.S. Energy Information Administration’s weekly U.S. crude inventory report, oil has priced higher amid concerns of global crude supply and geopolitical tensions, including pending sanctions with Iran and Venezuela’s unstable economy. On Friday, the U.S. Energy Department research group reported an increase of 8 million barrels in U.S. crude oil stocks to 403 million barrels, but noted that oil supplies in Cushing, Okla., have declined some 63 million barrels compared to the same period in 2017.
As a result, fall gas prices have not been this expensive since 2014. At that time, motorists were paying on average more than $3 per gallon and crude oil was selling well above $70 per barrel, according to AAA. This year, crude oil for November delivery is selling more than $25 a barrel higher than a year ago, and touched $74.72 a barrel on the New York Mercantile Exchange this week. International Brent crude was also higher 57 cents at $84.48 per barrel on the London ICE Futures exchange.
Although Arkansas gasoline prices are well off the national average and among the five states with the lowest pump prices, drivers across the state are still paying 37 cents higher than a year ago at $2.66 per gallon, according to AAA’s daily fuel gauge. Nationally, drivers in Hawaii, California and Washington State are in the most expensive fuel markets, paying an average of $3.84, $3.80 and $3.44 per gallon, respectively.
Overall, motorists on the West Coast region are paying the highest prices for retail gasoline in the country, with six of the region’s states represented in the nation’s top 10 most expensive list. All prices in the region have increased on the week, with California (+7 cents) leading the way.
Gas prices are more expensive for every state in the Great Lakes and Central region except Wisconsin ($2.89) where prices saw no change on the week. Three states landed on this week’s biggest changes list: Ohio (+9 cents), Kentucky (+8 cents) and Indiana (+7 cents). Regional refinery maintenance and expensive crude oil prices are two major factors contributing to the increase.
Virginia, New Jersey and Washington, D.C., in the Mid-Atlantic and Northeast also landed on the top 10 list with the largest jumps in the country this week, each with a six-cent increase. Florida at $2.82 per gallon for the week was one of the only states in the country and Southeast to see gas prices remain stable.
Across the state, pump prices are up three cents for the week with motorists in Jonesboro and Hot Springs seeing the cheapest pump price per gallon at $2.66 per gallon. According to GasBuddy.com, several locations in the Jonesboro area are selling regular unleaded gasoline as low as $2.47 per gallon.
Drivers in the Northwest Arkansas and Pine Bluff markets had the highest fuel costs at $2.69 per gallon. Gasoline consumers in the Little Rock area, West Memphis, Fort Smith and Texarkana were all paying between $2.64 and $2.66 per gallon for regular unleaded.
AAA: HURRICANE MICHAEL WON’T DISRUPT FUEL PRICES
For all other states in the South and U.S. Southeast, prices were up for the week with Louisiana seeing the largest jump in the region at seven cents, which was also among the top five in the country. Pump prices across the region could spike later this week if Hurricane Michael veers off its current path and disrupts fuel supplies across the region.
However, AAA officials said Hurricane Michael would not have a direct impact on gasoline supplies or prices at the pump in that state. The hurricane’s projected path directs the storm east of most oil drilling rigs and refineries along the Gulf coast. “This eases concerns of significant refinery and rig shutdowns, which would otherwise cause prices to rise,” a AAA spokeswoman said.
Meanwhile, the EIA said this week that the 2018 Atlantic hurricane season produced 13 named storms as of October 5, including 6 hurricanes. The most recent of these storms that made landfall in the U.S. were Tropical Storm Gordon and Hurricane Florence. Gordon entered the Gulf of Mexico on Sept. 3, triggering the first shut-in oil and natural gas production of the 2018 season.
The effect that a storm has on crude oil and natural gas production depends, in part, on the infrastructure in its path, EIA officials said. In 2017, Category 1 Hurricane Nate passed through the high-producing Mississippi Canyon lease area in the Gulf of Mexico, resulting in a larger disruption to production than Hurricane Harvey, a Category 4 storm did not pass through major offshore production areas.
As the 2018 hurricane season progresses, shut-in oil and natural gas production will continue to depend largely on the trajectory as well as the severity of storms, U.S. energy officials said. In the Gulf of Mexico, 66% of crude oil and 42% of natural gas production comes from wells in the Mississippi Canyon and Green Canyon lease areas, both located southeast of Louisiana.
A storm passing through these high-producing areas can have a large effect on total offshore production. Storms that make landfall and damage onshore infrastructure, such as storage facilities and gathering lines, can have a longer-lasting effect on production than storms that only affect a producing area.