The price of oil has taken a downturn. This decline is causing a drop in pump prices across the nation, providing some much-needed economic relief. According to AAA, the national average for a gallon of regular gasoline has dropped five cents from last week, currently standing at $3.63.
AAA spokesperson Andrew Gross says, “The national average reached $3.68 last week, and that might be the peak price for now. As long as the oil cost keeps wobbling around the low to mid $70s per barrel, drivers will benefit when they fuel up.”
Many small businesses, especially those in industries such as logistics, delivery services, and other transportation-focused sectors, are expected to reap benefits from these declining prices. Lower fuel costs can translate to reduced overhead expenses, potentially leading to increased profitability and providing an opportunity for reinvestment and growth.
However, this development arrives amidst a complex backdrop. Energy Information Administration (EIA) data reveals an unexpected surge in gas demand last week, jumping from 8.52 to 9.51 million b/d. This spike caught market observers off guard, and there may be revisions when the EIA releases its final demand measurements for April.
Traditionally, higher demand coupled with a drop in total domestic gasoline stocks, which decreased by 2.4 million bbl to 221.1 million bbl, would lead to increased pump prices. Nevertheless, the fluctuating oil prices have had the opposite effect, driving prices lower. If the trend of declining oil prices continues, pump prices are anticipated to follow suit.
It’s crucial to note that today’s national average of $3.63 is 20 cents more than a month ago but still 50 cents less than a year ago. This demonstrates a volatile market, influenced by a myriad of factors from global oil supply and demand to geopolitical events.
Taking a closer look at the state-level changes, the biggest decreases in average gas prices over the past week were in Michigan (12 cents), Ohio (11 cents), Texas (11 cents), Indiana (10 cents), Iowa (10 cents), North Carolina (9 cents), Tennessee (9 cents), South Carolina (8 cents), Wisconsin (8 cents) and Nebraska (8 cents).
In the current market conditions, the least expensive fuel prices can be found in Mississippi ($3.11), Arkansas ($3.22), Louisiana ($3.22), Texas ($3.23), Alabama ($3.23), Tennessee ($3.27), South Carolina ($3.29), Oklahoma ($3.32), Georgia ($3.34), and Missouri ($3.35).
Despite these positive indicators, uncertainty looms on the horizon. Oil prices fell recently amid concerns that low consumer confidence could contribute to a potential recession this year. If a recession does occur, oil demand and prices will likely decline. The EIA reported a decrease in total domestic commercial crude inventories by 5.1 million bbl to 460.9 million bbl last week.
Overall, these trends in the oil and gas markets are vital for small business owners to monitor. Understanding the factors affecting fuel prices can help them plan effectively, manage their operating costs, and make strategic decisions that could impact their bottom line.
Seems like we’re running pretty close to the 2019 trend line, but with the inflation that’s been making everything more expensive. And we can’t forget that oil is a global racket. OPEC artificially influences production to manipulate prices.