Gas Prices are hovering at the lowest prices since 2005 as we head into the Independence Day Weekend.

Iowa's average sits at $2.16 per gallon.

Despite a surge in gasoline demand on the week, the national average price for gasoline is nearing an all-time low for the year at $2.26/gallon. February of this year was the last time the price of a gallon of regular unleaded gasoline was this low nationally.

On the week, gas prices fell in all but three states (Indiana, Ohio and Michigan) while all regions, except the Southeast, saw gasoline inventories drop. This is good news for people planning to travel for the Independence Day holiday. AAA forecasts 37.5 million Americans will drive to their holiday destination, which potentially can mean a small increase in holiday weekend gas prices. Today, consumers can find gas for $2.24 or less at 60 percent of gas stations in the country.

The price of gas has fallen for 24 consecutive days. Today’s national average is three cents cheaper than a week ago and eleven cents cheaper than a month ago. Heading into Independence Day weekend, gasoline is four cents less than a year ago. Record refinery rates, high gasoline and crude inventory, and less-than-favorable demand this year are among the contributing factors causing the downward price trend.

Quick Stats

  • The nation’s top ten markets with the largest yearly changes: Hawaii (+26 cents), Illinois (-22 cents), New Jersey (+19 cents), Ohio (-18 cents), Utah (+18 cents), Alaska (+17 cents), Wisconsin (-16 cents), Washington (+16 cents), Oklahoma (-15 cents) and Oregon (+14 cents).
  • The nation’s top ten markets with the cheapest gas this week include: South Carolina ($1.93), Oklahoma ($1.95), Alabama ($1.99), Mississippi ($2.00), Missouri ($2.01), Tennessee ($2.02), Arkansas ($2.02), Virginia ($2.03), Texas ($2.06) and Kansas ($2.07).

Great Lakes and Central States

One of the most volatile regions as of late, the Great Lakes and Central States saw some stability on the week. Ten (10) states saw prices decrease on average by 2 cents. Indiana (-8 cents), Illinois (-6 cents), Missouri (-6 cents) and South Dakota (-5 cents) all earned spots on the states with the biggest decrease list on the week. Meanwhile, three states saw the only increases in the country: Indiana (+7 cents), Ohio (+4 cents) and Michigan (+4 cents).

For the first time in three weeks, gasoline inventory declined. According to the Energy Information Administration (EIA), inventory sits at nearly 55 million bbl, similar to this time last year inventory levels.

Oil Market Dynamics

On Monday morning, the price per barrel of West Texas Intermediate crude oil opened at just above $43. The opening price follows a turbulent week for the market, where prices moved to their lowest level in 10 months. Last week’s report from the EIA showed that demand for crude oil remains robust as gross inputs at U.S. refineries have topped 17 million b/d in each of the past nine weeks. However, crude oil inventories remain high, with current storage levels near 500 million bbl, which is approximately 9 million bbl ahead of last year. Moreover, when looking at 5-year crude oil storage trends, the surplus is even more eye-opening: roughly 82 million more barrels are in storage now than five years ago. Last week, Baker Hughes, Inc. reported that the U.S. oil rig count grew by 11 last week, landing at 758 rigs – a three year high. The data points toward the rising tide of crude oil, which has contributed to prices dropping at the pump for drivers, and has helped to push the price per barrel down. The cheaper price per barrel has contributed to refineries producing record amounts of gasoline for most of the year.

Last week, the EIA noted that U.S. refinery capacity has increased by 659,000 barrels per day since mid-August 2015, which is the equivalent of building a new refinery in the U.S. Additionally, EIA highlighted that recorded weekly refinery gasoline output rates have hit their 24 highest points since the summer of 2015. This growing trend means that refineries are producing a record amount of gasoline that has easily met increasing demand from drivers and has left gasoline stockpiles at high levels. Meaning, the national gas price average will likely continue to drop until demand can surge to chip away at the surplus. However, Independence Day Weekend has the possibility to be an outlier.

Motorists can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad, and Android. The app can also be used to map a route, find discounts, book a hotel, and access AAA roadside assistance. Learn more at AAA.com/mobile.

AAA updates fuel price averages daily at www.GasPrices.AAA.com. Every day up to 120,000 stations are surveyed based on credit card swipes and direct feeds in cooperation with the Oil Price Information Service (OPIS) and Wright Express for unmatched statistical reliability. All average retail prices in this report are for a gallon of regular, unleaded gasoline.

(Source: AAA)