Economic News

Gas Prices Fall Slightly as Potentially Volatile Autumn Looms

This week the national average gas price  fell slightly — but that doesn’t tell the story of what’s shaping up to an interesting time for the oil market. First, according to GasBuddy data, the average gas price now sits at $2.88 a gallon, down 2.6 cents from last week. Meanwhile diesel prices nudged in the opposite direction, moving up 1.6 cents to $3.29 a gallon. Similarly there was a major disparity in how prices acted in Midwest compared to the West Coast.

Despite falling oil prices on the whole, the largest decline in average prices occurred in the Great Lakes region of the U.S. More specifically Michigan saw prices drop 12.3 cents followed by Ohio’s 11.1 cents, Indiana’s 10.0 cents, and Illinois’s 7.6 cents. As GasBuddy’s head of petroleum analysis Patrick DeHaan explained, “Great Lakes states have wreaked havoc on the national average, sending it down considerably as stations there have passed along the recent drop in oil prices relatively quickly.” However that wasn’t the case in states like Washington and Oregon, which saw prices increase following a recent natural gas pipeline explosion.

While pipeline explosions and refinery closures are certainly bad news, a much larger threat could soon upend the oil market. Following the disappearance of journalist Jamal Khashoggi from a Saudi consulate in Turkey, the relationship between the U.S. and Saudi Arabi could soon see a major strain. Although President Trump has been quick to reiterate that Saudi’s Crown Prince Mohammed bin Salman has denied allegations that he was behind Khashoggi’s apparent death, Trump has warned that there will be serious consequences if fault is found.  According to DeHaan, this developing story “could rile tensions between the world’s largest oil consumer and one of the world’s largest oil producers.”

Turning from frightening geopolitical stories back to the numbers at home, average gas prices are still up 2.5 cents compared to last month and 42 cents higher year over year. Once again diesel was even higher, climbing 57 cents from the $2.72 average it saw this time last year. Finally, despite the big price drops in the Great Lakes, the lowest prices in the nation remain in South Carolina ($2.60), Mississippi ($2.60), Alabama ($2.62), Louisiana ($2.63) and Oklahoma ($2.64) while some of the usual suspects Hawaii ($3.84), California ($3.82), and Alaska ($3.35) had the highest, in addition to the aforementioned Washington ($3.52) and Oregon ($3.37) .

From pipelines to murder plots, the oil industry and, by extension, gas stations are certainly finding themselves in a strange spot. And while it may seem dismissive to tie Khashoggi disappearance into a “pinch at the pump” narrative, make no mistake that the Saudi-U.S. fallout that could occur would be a major economic story. All this led DeHaan to conclude, “I don’t know that I’ve ever seen autumn so rife with possible volatility at the pump as we’re seeing now.”

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