Gas Prices Drop for First Time in 2018

As oil prices fall, retail prices for gasoline should continue to fall. But with volatility in the stock market, all bets are off

WALNUT CREEK, Calif. Feb.14, 2018  – Gas prices in California dropped for the first time in 2018, but it’s unclear whether this one-week decline is a signal that cheaper gas is on the horizon for the Golden State.

California’s average price for a gallon of unleaded gasoline was $3.34 on Tuesday, just one cent lower on the week. But that small decrease put an end to 45 straight days of rising gasoline prices; California started the year with an average price of $3.10 per gallon and peaked at $3.35 last week.

U.S. gas prices typically decrease in January and February as travel demand falls after the holiday season, but rising oil prices the last few months resulted in abnormally high prices at the pump. Crude oil prices hovered around $50 a barrel for most of 2017, but jumped to $70 a barrel by early January 2018 after Saudi Arabia and other OPEC countries began to cut oil production.

Some analysts predicted that rising oil prices could hit $80 a barrel and push California gasoline to $4 by this May, but AAA believes that is speculative. The Oil Price Information Service said in its 2018 outlook that $70 prices for crude oil are likely unsustainable in 2018, and after last week’s stock market volatility, crude oil prices dropped nearly 8 percent. On Tuesday crude oil was selling for about $62 a barrel.

Another factor in this year’s higher prices has been a strong economy on the West Coast, which means more people driving and consuming energy. Gasoline demand registered at 9.1 million barrels per day, a 169,000 barrel-per-day increase year-over year.

“California consumers should be prepared for prices to increase this year another potential 10 to 15 cents, but many market factors will drive that. Without a crystal ball, it’s too soon to determine,” said Michael Blasky, spokesman for AAA Northern California.

AAA February 2018 Gas Price Report