AAA: Low pump prices a sign of things to come?

Posted at 12:08 PM, Jan 06, 2016
and last updated 2016-01-06 14:08:03-05

In 2015, Idahoans paid an average price of $2.51 for a gallon of regular grade gasoline, eleven cents more than the U.S. national average price of $2.40 -- but still the lowest annual average price going back to 2009, according to AAA Idaho.    

In 2014, Idahoans paid an average price of $3.40 per gallon, and the U.S. mark was $3.34. “Thank cheap, abundant oil for a windfall that saved Americans up to $115 billion at the pump in 2015, enough to account for more than $550 for every licensed driver,” AAA Idaho spokesman Dave Carlson said.

The last year Idaho’s average annual price was lower than $2.51 was 2009, when it was $2.35, he added.

“Gem State motorists shared the distinction this year of paying both the lowest and highest prices in the country,” Carlson stated. “For a brief period in January and February, Idaho and Utah alternately posted the lowest pump prices in the country. “

But Idaho succumbed to rising prices that eclipsed the U.S. average commencing about the third week of March. It was a position the state did not relinquish for the rest of the year, he said. Idaho pump prices were among the top ten highest for months. At one point, on Labor Day, Idaho’s average mark was 42 cents higher than the U.S. average, making it sixth highest in the country, Carlson said.

“Fewer refineries operate in the West, which can put the region at risk when supplies are tight.  For example, the February shutdown of the ExxonMobil refinery in Torrance, California put immediate pressure on pump prices in southern California. A subsequent diversion of finished gasoline product to cover shortages elsewhere in the region pushed Gem State prices higher,” he pointed out.

Idaho’s average price on February 2 was $1.85. By April 1, it had risen 62 cents to $2.47. The state’s highest prices for 2015 were recorded in July when the average monthly price hit $3.04, compared to $2.75 for the U.S. 

Legislative action to raise the state’s 25-cent fuel tax by seven cents to 32 cents a gallon to pay for deferred road maintenance and repair pushed Idaho prices higher starting in July, but low oil prices were more than enough to offset the effect at the pump.  

“As we analyze pricing trends, Idaho pump prices generally lag what’s going on elsewhere by two months,” Carlson said. “Idaho’s slower reaction to changing oil prices is frequently reflected by higher pump prices when the rest of the country is headed in the other direction.”   

Prices are likely at or near the lowest level most motorists will see this year, experts said. “Still, it’s possible may drop to the $2 average mark. But historically prices begin rising by mid-February as part of a pre-Spring run-up in anticipation of the switch-over to summer-blend fuels,” Carlson explained. 

Idaho’s $2.13 average price is ninth highest in the country. The U.S. average price today is $1.99.  

AAA estimates the annual U.S. average price of gas in 2016 is likely to end up between $2.25 and $2.45 per gallon, which would be cheaper or at least comparable to this year’s average of $2.40 per gallon. “Based on historical data and accounting for the state’s new higher fuel tax, it’s reasonable to assume that Idahoans will pay a dime more than the annualized national average price,” according to Carlson. 

The AAA said that about 71 percent of U.S. stations are selling gas for less than $2 per gallon. More than 16,000 stations across the country are selling gas for less than $1.75. The average U.S. price of $1.99 right now compares to $2.20 a year ago. Idaho’s current average price of $2.12 compares to $2.10 a year ago.

In Boise, the average price is $2.14/gallon; in Coeur d’Alene, $1.99; Idaho Falls, $2.03; Lewiston, $2.16; Nampa, $2.14; Pocatello, $1.98; Twin Falls, $2.04.

Local pump prices continue to take their cues from regional factors that affect the supply, availability and shipment of finished gasoline. Planned or unplanned maintenance can constrict supplies regionally, which has caused price spikes on the West Coast, the Midwest, and even Idaho. This can cause short-term spikes in prices until supplies return to normal levels, Carlson said.

Gasoline prices should remain less than $3.00 for much or all of 2016, AAA says. “Nevertheless, there are significant uncertainties regarding what may happen with crude oil prices, including what can happen when a refinery goes down due to a fire or explosion,” he stated; adding, “Predicting gas prices over an extended period of time is difficult, given the potential for how U.S. drillers and oil producers elsewhere in the world will react.”