The International Energy Agency (IEA) February oil market report will put more downward pressure on crude prices just as the price of gasoline in some parts of the United States dips to above $1.10 a gallon. Prices are moving swiftly to below $1, a price last posted in the United States in December of 1993.
The new IEA report‘s authors wrote:
Having peaked, at a five-year high of 1.6 million barrels per day (mb/d) in 2015, global oil demand growth is forecast to ease back considerably in 2016, to 1.2 mb/d, pulled down by notable slowdowns in Europe, China and the United States …
Crude trades at $30 per barrel now, and the forecasts of $20 have become more likely.
More than 50 stations in Oklahoma sell gas for under $1.15 per gallon. One station sells regular gas as $1.11, according to GasBuddy. That is against a national price for an average gallon of gas at $1.72. A month ago, that price was just short of $2.
AAA experts largely agree with the IEA assessment:
Domestic crude oil inventories reached their highest level for this time of year in nearly eight decades, and barring any major disruptions in supply, gas prices are likely to remain near their lowest price point since the Great Recession in the near term. Today’s average price of $1.74 per gallon reflects a savings of $1.07 per gallon versus the 2015 peak price reached this past June, and gas prices have fallen for 31 of the past 33 days. Pump prices are down six cents per gallon on the week, 24 cents per gallon on the month, and consumers are saving 44 cents per gallon versus this same date last year.
The gas price figures in some Oklahoma locations are not a surprise. The average price for a gallon of gas across that state is $1.37. The price is not much higher in Missouri ($1.41), Indiana ($1.45) and Kansas ($1.47).
Among the primary reasons gas prices are low in some areas is proximity to refineries. That, however, has been largely outweighed by state gas taxes and levies. According to the American Petroleum Institute, the national average of taxes per state is $0.48 per gallon. However, Oklahoma has taxes that are the fourth lowest among all states at $0.354. Missouri’s are the sixth lowest at $0.357. State gas taxes vary widely, because each state legislature has broad power to set them.
24/7 Wall St. has done an analysis of gas taxes in all 50 states. What it shows is that the marriage of low oil prices and state taxes have created an environment that soon could drive gas prices below $1.