A September 4th pre Labor Day report from the U.S. Energy Information Administration highlights that the average retail price for regular gasoline was $2.51/gallon in the U.S. on August 31st. This represents the lowest price for gasoline on the Monday before Labor Day in the last 11 years, and of particular note, is almost a dollar a gallon lower than on August 31st of 2014.
Rather obviously, the huge drop off in the price crude oil in the last 15 months is the primary factor causing the major decline in U.S. gasoline prices. The report points out that crude oil prices are lower for a myriad of reasons, including worries about economic growth in emerging markets (especially China), anticipation of more oil exports from soon to be free from sanctions Iran, as well as continued growth in crude oil inventories leading to a global oil glut.
Labor Day – More on dropping gas prices in the U.S.
The new EIA report notes that the average retail gasoline price in the United States is up 47¢/g from the last week of January (when it was $2.04/g), mainly related to a few-month boost in crude oil prices earlier in the year, exceptionally high demand demand in the summer driving season, and refinery outages on the West Coast and in the Midwest over the last few months.
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Breaking things down in terms of regions, average gas prices range from $3.16/g on the West Coast to $2.20/g on the Gulf Coast. The report makes note of the fact that gas is in short supply on the West Coast, particularly in California, which also has the highest gas prices among all states surveyed by EIA. As of August 31st, gas prices averaged $3.34/g in California and $3.55/g and $3.24/g in the cities of Los Angeles and San Francisco, respectively.
Midwest gas prices have dropped a good bit in the last couple of months as a shutdown of the BP refinery in Whiting, Indiana had caused retail prices in the area to jump by 60¢ per gallon. Gas prices in Chicago are currently averaging $2.95/g, and prices in Cleveland are at $2.31/g on average.
Given most of U.S. petroleum refineries are located on the Gulf Coast, that region continues to enjoy the lowest gasoline in the nation, with prices bottoming out at $2.20/g for the region as of August 31st, and ticking up to $2.21/g in Houston.