Analysis by Dr. Nancy Yamaguchi

The Energy Information Administration (EIA) released its weekly data on diesel and gasoline retail prices for the week ended October 9th, 2017. At the national level, gasoline prices dropped significantly, falling by 6.1 cents/gallon. Diesel prices declined by 1.6 cents/gallon. Gasoline and diesel prices subsided in all PADDs nationwide.

During the week ended September 29, crude inputs to refining dropped by 145 kbpd. This came as a surprise, since the prior two weeks saw refinery crude runs come roaring back by nearly 2.1 mmbpd. Crude runs had dropped by over 3.6 mmbpd in the aftermath of Hurricane Harvey, and the market had anticipated a gradual restoration. But U.S. exports of crude oil have risen dramatically in September, while refined product supplied has fallen. Demand fell following Hurricane Harvey and Hurricane Irma, and the question now is whether some of the demand destruction will be permanent, or at least long-lasting.

U.S. crude production rose by 14 kbpd during the week ended September 29th. The active rig count in the U.S. fell by 4 (2 oil rigs and 2 gas rigs) during the week ended October 6, suggesting that crude price weakness dampened upstream enthusiasm. WTI crude prices shed $1.86 during the week, closing at $49.78/b.

For the current week ended October 9, diesel prices fell by 1.6 cents to arrive at an average price of $2.776/gallon. Diesel prices were robust over the summer, rising steadily in August and September. Prices have been flattening so far in October.

PADD 1 retail diesel prices decreased by 2.6 cents to $2.793/gallon. New England prices fell by 1.6 cents to average $2.751/gallon. Central Atlantic diesel prices fell by 1.5 cents, to an average of $2.919/gallon. Lower Atlantic prices dropped by 3.6 cents to average $2.712/gallon. PADD 1 prices were 35.2 cents/gallon above their prices for the same week last year.

In the Midwest PADD 2 market, retail diesel prices declined by 0.9 cents to average $2.738/gallon. Prices were 32.1 cents/gallon above their level for the same week last year.

In the Gulf Coast PADD 3, retail diesel prices dropped by 1.6 cents to average $2.599/gallon. This price was 28.2 cents higher than in the previous year.

In the Rocky Mountains PADD 4 market, retail diesel prices declined by a modest 0.4 cents to $2.856/gallon. This price was 34.8 cents higher than in the prior year.

In the West Coast PADD 5 market, retail diesel prices dropped by 2.1 cents to an average of $3.088/gallon. This price was 37.6 cents above its level from last year. Prices excluding California fell by 2.5 cents to $2.993/gallon, which was 40.2 cents above the retail price for the same week last year. California diesel prices fell by 1.6 cents to an average price of $3.166/gallon, 35.7 cents higher than last year’s price. PADD 5 typically has the highest fuel prices in the country, and it remains the only PADD to have diesel prices above $3 per gallon.

U.S. retail gasoline prices fell significantly, shedding 6.1 cents for the week ended October 9, to arrive at an average price of $2.504/gallon. Hurricane Harvey induced a 28 cents/gallon price spike during the week ended September 4, and gasoline prices remained high for the next two weeks or so. Over the past four weeks, 15.7 cents of this price spike have been reversed. Moreover, seasonal demand is expected to wane this coming month, exerting downward pressure on prices.

For the current week ended October 9th, East Coast PADD 1 retail prices for gasoline dropped significantly by 7.0 cents to $2.522/gallon. This was the largest price drop among the five PADDs. The average price was 29.3 cents higher than last year’s price. Prices decreased by 5.8 cents in New England to $2.607/gallon. Central Atlantic market prices dropped by 5.2 cents to $2.601/gallon. Prices in the Lower Atlantic market plummeted by 8.8 cents, to an average price of $2.437/gallon. This was 23.3 cents higher than last year’s average price for the same week.

In the Midwest PADD 2 market, retail gasoline prices dropped by 6.9 cents to average $2.333/gallon. Gasoline pump prices were 11.2 cents higher than they were one year ago.

In the Gulf Coast PADD 3 market, gasoline prices fell by 6.5 cents to average $2.316/gallon. This was the lowest average price among the five PADDs. Prices for the week were 27.8 cents higher than for the same week in 2016.

In the Rocky Mountains PADD 4 market, gasoline pump prices declined by 2.5 cents, to average $2.542/gallon. This price was 29.8 cents higher than at the same time in 2016.

In the West Coast PADD 5 market, retail gasoline prices decreased by 2.8 cents to average $2.947/gallon. This was 27.2 cents higher than at the same time a year ago. PADD 5 typically has the highest gasoline prices among the five PADDs, and its retail gasoline prices had been above $3/gallon until the past two weeks. Excluding California, West Coast prices fell by 2.8 cents to an average of $2.713/gallon. This was 25.4 cents higher than at the same time in 2016. In California, prices also fell by 2.8 cents, arriving at an average pump price of $3.083/gallon. California was the only state to have average prices reported at above $3 per gallon.