Low demand, especially in the Midwest, has been driving gasoline prices down recently, but actions in the Middle East could still rock the market.
Illinois gas prices have fallen 9.8 cents per gallon in the past week, averaging $2.51 per gallon today, according to a daily survey of 4,378 stations by the GasBuddy analysis service. Gas prices in Illinois are 0.9 cents per gallon lower than a month ago and stand 41.3 cents per gallon higher than a year ago.
In Robinson today, regular gasoline was pumping for $2.49 to $2.51 per gallon. That compares to $2.55 in December and around $2.15 a year ago, when gasoline priced flirted with the $2 mark early in the year before rising 25 to 35 cents a gallon by March.
Diesel here was at $2.94 to $2.96 per gallon today, almost unchanged from December.
In the area, a sampling of prices for regular gasoline includes $2.49 in Palestine; $2.27 in Oblong; $2.19 at Prairie Creek, Ind.; $2.27 at Shelburn; $2.38 in Sullivan; $2.41 in Newton, Casey and Charleston; $2.45 to $2.47 in Vincennes; $2.49 in Lawrenceville; and $2.31 to $2.37 at pumps along Interstate 70 in Marshall.
In the Terre Haute market, according to the AAA Fuel Gauge Report, regular gasoline today was averaging $2.30 a gallon, with mid-grade at $2.61. That compares with $2.46 andf $2.76 respectively a month ago.
The lowest gas price in Illinois today could be found in Joliet, at $2.03 a gallon. The next-lowest priced range from $2.14 to $2.21 and were all at suburban Chicago locations. This is according to the illinoisgasprices.com website, which relies on motorist reports.
The lowest prices for diesel fuel today were at locations in Salem, at $2.31 and $2.37.
The national average price of gasoline has fallen 2.0 cents per gallon in the last week, averaging $2.55 per gallon Sunday. The national average is down 0.8 cents per gallon from a month ago and stands 30.4 cents per gallon higher than a year ago.
"With oil prices sagging lately, the door has been opened for a notable decline in U.S. gasoline prices, and that's exact what has happened, with more declines likely coming ahead of us before the fun is over," said Patrick DeHaan, head of petroleum analysis for GasBuddy. "The Midwest has been the largest beneficiary of seasonal effects thus far with prices in several areas there declining upwards of 10-15 cents per gallon. The rest of the country will follow lower for the time being as demand for gasoline remains abysmal and the fuel being produced today will have to eventually be purged from the system over the next few months as refiners begin the transition to summer gasoline."
Several geopolitical events have provided upward pressure on crude oil prices in recent months, according to the U.S. Engergy Information Administration. These events include attacks on oil tankers transiting the Persian Gulf and the Red Sea, the September 2019 attack on Saudi Arabia's energy infrastructure, and recent tensions between the United States and Iran.
Although the immediate price spike following the mid-September attacks on Saudi Arabia was relatively short-lived, the attacks contributed to an increased price risk. Crude oil prices increased during this period despite global liquid fuels inventories growing by 130,000 barrels per day.
Further increasing the geopolitical risk premium on global oil prices, the U.S. military action in Iraq in January increased uncertainty about potential disruptions to oil production and shipping in the Middle East. Following these developments, the price of Brent crude oil reached $70 per barrel, but prices have subsequently fallen.
As the risk decreases, EIA assumes crude prices will decline in early 2020 to an average of $62 per barrel in May. Any physical supply disruptions would put upward pressure on prices, but none are forecast.
Local crude oil was at $51.50 Monday at Plains Marketing LP, compared to $54.25 a month ago and $46.75 a year ago.
In the first half of 2020, EIA expects significant supply growth. Production restraint from members of the Organization of the Petroleum Exporting Countries and several non-member countries, most notably Russia, and accelerating global demand growth will be more than offset by non-OPEC production, largely in the United States, Norway, Brazil, and Canada.
Later in 2020 and in 2021, non-OPEC production growth (particularly from U.S. oil) will slow significantly, which will contribute to a tightening market and upward pressure on crude prices.
U.S. regular gasoline retail prices averaged $2.60 per gallon in 2019, and EIA forecasts that they will average $2.63 per gallon in both 2020 and 2021.