Southeast Missourians who were happy to see last year’s gas prices drop to below $3 a gallon may have more to smile about in 2014.
Industry experts say that, while U.S. gasoline prices will see huge swings and regional volatility in 2014, when all the final figures are calculated the average price this year is expected to fall by about 10 cents a gallon from 2013 numbers.
This would push the year-long average below $3.40 a gallon for the first time since 2010 when fuel averaged $2.78 per gallon for the year. The usual upside risks are there — U.S. refinery maintenance, storm threats, disruption in the Middle East and North Africa — but 2014 projects to be a year that will find more consistent downward pressure on U.S. prices than in any year since the Great Recession.
According to gasbuddy.com, Missouri’s current per gallon average price of $3.03 is lower than the national average of $3.30. While gas prices in some local communities is running slightly higher than the state average, as of last week the cost per gallon for regular unleaded elsewhere in the region remained around six cents under the $3 a gallon mark.
Thanks to the U.S. shale oil boom and continued growth in Canadian oil sands, some are beginning to call the United States the “Insulation Nation.”
The U.S. Energy Information Administration says the nation’s crude production has advanced to its highest level since 1989, and imports of all foreign crude look to continue to drift lower. U.S. crude imports in late 2013 were as much as four million barrels per day below some of the levels witnessed in 2010. North American production increases in recent years have more than made up for the loss of Libyan crude, or world barrels lost to Iranian sanctions.
According to Gas Buddy spokesperson Kelsey Kloza, crude oil costs never saw a “super spike” in 2013, despite the convergence of global disruptions that removed more than three million barrels of supply for a brief period last summer.
“With the shale oil boom just hitting its stride, the United States has heavy layers of insulation that should protect it from price spikes that could impact other continents,” said Kloza. “Discounts for U.S. oil in 2013 varied from just a few dollars per barrel to more than $40 barrel (for Canadian sour crude) and discounts to world prices should again be pervasive and highly variable in 2014.”
It was not uncommon to find a dollars’ worth of difference between street prices in different states throughout all of 2013, and this same state-by-state diversity will continue and even broaden in 2014. Many of the differences are due to tax treatment, but incredibly variable crude costs and wholesale gasoline prices increase the diversity.
While 2014 should deliver a more temperate gasoline price background than 2011, 2012, and 2013, industry experts say there is the potential for dramatic price spikes and equally dramatic price plunges. However, the interior of the country — a beneficiary of the most discounted crude oil on the planet — should have the greatest insulation against super spikes. Motorists traveling in the Great Lakes, Great Plains, and Rocky Mountain states are among those most likely to see pricing points not witnessed since 2010.
The final numbers for U.S. gasoline consumption won’t be delivered by EIA until next month, but 2013 may indeed have seen a small rise in demand, which would be the first annual increase since the peak demand year of 2007.
Industry experts say a major increase in consumption is not likely in 2014. Demand faces considerable headwinds with U.S. drivers aging. The fastest growing demographic group includes those over the age of 55, and represents people who will drive less and less in coming years.
“While it is likely 2014 will continue to see gasoline reign as king of the transportation fuels,” Kloza said “watch for diesel to make some more inroads in mid-decade years. Research confirms as many as 40 new light-duty diesel-fueled vehicles will be introduced between now and the end of 2015.
“Despite higher street prices, diesel could see its market share of light duty vehicles increase to three or four percent in relatively short order.”
Kevin Jenkins is a reporter for the Daily Journal and can be reached at 573-518-3614 or email@example.com