Surge in demand sends Oregon gas prices soaring

Demand for gasoline was at its highest level for October in a decade, and that’s had gas prices on the rise — in some cases sharply, such as a 21-cent a gallon jump in the Bend area in the past week, AAA Oregon-Idaho reported Tuesday.

The U.S. Energy Information Administration reports that the latest gasoline demand measurement is the highest for the end of October since 2006 and that’s putting upward pressure on prices. For the week, the national average for regular unleaded surges seven cents to $2.54 a gallon while the Oregon average jumps six cents to $2.81.

“Demand for gas has been strong for October, due in part to nice weather in many parts of the country. We didn’t see gasoline consumption drop like we usually do in the fall when the summer driving season comes to an end,” says Marie Dodds, public affairs director for AAA Oregon/Idaho. “The robust demand has led to tightened supply levels and gas price hikes. However, AAA doesn’t expect this to be a long-term trend. Gas prices are expected to fall as we approach the holidays.”

Oregon is one of 47 states and Washington D.C. where gas prices are higher week-over-week. Prices are less in two states (Utah and Idaho) and holding steady in one state, Georgia. The largest increases are in Ohio (+19) and Illinois (+19 cents). Utah has a decrease of 3 cents and Idaho’s average is down one cent.

Oregon is one of 28 states where gas prices have risen in the last month. The largest monthly increases are in Indiana (+36 cents) and Ohio (+33 cents). The national average is three cents more and the Oregon average is a penny more than a month ago. The largest monthly decreases are in Georgia (-18 cents) and Alabama (-12 cents).

The West Coast still has the most expensive gas prices in the nation, with six of the top 10 markets in this region. California bumps Hawaii out of the top spot this week; Hawaii moves to second followed by Alaska. These states remain the only three with averages at or above $3 a gallon. California shows the largest increase for the week in this region with a jump of 18 cents. Washington and Oregon round out the top five. Oregon is fifth most expensive for the 19th week in a row.

Rank Region Price on 11/7/2017 1 California $3.22 2 Hawaii $3.17 3 Alaska $3.12 4 Washington $2.96 5 Oregon $2.81 6 Illinois $2.77 7 Pennsylvania $2.75 8 Nevada $2.73 9 District of Columbia $2.71 10 Connecticut $2.70

Drivers in California are likely to see pump prices increase due to new gasoline taxes that were imposed on November 1. The tax rate for gasoline increased 12cts/gal, from 29.7cts/gal to 41.7cts/gal.

In the EIA’s latest report, total gasoline stocks are below 28 million bbl. On the West Coast, reaching a seven-week low at 27.6 million bbl. Additionally, EIA’s report showed that the refinery utilization rate of crude fell to 81.4 percent from 81.9 percent last week, which means less gasoline is being produced. With demand remaining high and supplies tightening in the region, prices are also being pushed up by these supply and demand factors.

The nation’s cheapest markets are Alabama ($2.22) and Mississippi ($2.24). For the 15th week in a row, no states have an average below $2.

Drivers are paying more than a year ago to fill up. The national average is 32 cents more and the Oregon average is 28 cents more than a year ago.

Oil Market Dynamics

Crude oil prices jumped to their highest prices since the summer of 2015 to start this week after making solid gains last week. The latest EIA report showed major inventory draws and increased exports, both of which have helped push oil prices higher. Crude oil inventories slid by 2.4 million bbl, while crude oil exports reached a new record of 2.133 million b/d. All of this news has given market observers renewed confidence in seeing oil prices pushing higher as supplies appear to grow tighter and demand remains strong, fueled by oil demand growth in key export markets.

Another factor impacting the markets is the political shakeup in Saudi Arabia after the crown prince Mohammed Bin Salman consolidated his power over the weekend with the arrest of several political rivals on charges of corruption. The uncertainty surrounding the move is sending oil prices higher. It’s important to note that higher crude oil prices will likely lead to more North American production so this is not expected to be a long-term spike in crude oil prices.

Last week, Baker Hughes, Inc. reported that the U.S. oil rig count dropped by eight rigs, bringing the total to 729. The news follows reports that at OPEC’s next meeting in Vienna on Nov. 30, OPEC and allied non-OPEC producers will review the agreement to reduce production through March of next year. Some reports have stated that the group may extend the agreement through the end of 2018, which if true, will likely help boost oil prices through the end of the year.

At the close of Friday’s formal trading session on the NYMEX, WTI settled up $1.10/bbl at $55.64. At the close of Monday’s session, WTI added $1.71 to close at $57.35. Today crude is trading around $57, compared to $54 a week ago. Crude prices are up about 15 percent in the last month and are about $13 more per barrel than a year ago.

Diesel

For the week, the national average adds four cents to $2.79 a gallon. Oregon’s average gains two cents to $2.95. A year ago the national average for diesel was $2.42 and the Oregon average was $2.57.

You can check the latest citizen-reported gas prices on the High Desert at KTVZ’s Pump Patrol.