Sunday’s state average of $2.40 was 15 cents more than a month ago, and 32 cents more than the same time last year. Tennessee had the 10th-lowest state average in the nation.
The most expensive gas price averages in Tennessee were in Nashville at $2.42, Jackson at $2.42 and Kingsport-Bristol at $2.41. The least expensive gas price averages in Tennessee were in Clarksville-Hopkinsville at $2.36, Chattanooga at $2.37 and Morristown at $2.38.
Last week, stock market gasoline prices reached levels not seen since Hurricane Harvey passed over the Gulf Coast and caused refinery outages and higher gas prices. Based on current wholesale levels, pump prices could soon return to the high $2.40s in Tennessee, unless market prices retreat this week.
The price of oil climbed another $3 last week to set a new multi-year high. Friday’s close of $66.14 per barrel was the highest daily settlement since December 2014. Oil prices were up $15 per barrel since October, largely due to a tightening global oil market. Ongoing declines in U.S. inventories and a weakening U.S. dollar led to last week’s increase. U.S. crude stocks fell for a record 10th-consecutive week and reached the lowest level since February 2015, according to the Energy Information Administration.
High oil prices are preventing gas prices from taking their seasonal winter retreat. Oil prices have always played a significant role in what motorists pay at the pump. In fact, about half the price of gasoline is steered by the cost of crude.
In 2014, gas prices plunged from $3.69 down to $2 and below by the end of January 2015. During that time, oil prices tanked, falling from $106 per barrel to $45 per barrel. That was a result of the oil market becoming oversupplied with crude, as U.S. production reached its highest levels in decades.
The adverse is currently happening. Although U.S. production levels are strong, global oil inventories are tightening, largely due to OPEC’s agreement to reduce output by 1.8 million barrels per day.
“There appears to be a recipe for even higher gas prices brewing, and the rising price of oil is just one of the key ingredients,” said Mark Jenkins, spokesman for AAA. “During the next few months, refineries will randomly conduct maintenance on their equipment and switch to a more-expensive-to-produce summer-blend gasoline. During their downtime, these refineries reduce the amount of gasoline they put out into the market. Historically, that has caused gas prices to rise 30-75 cents, as a result. It’s unclear exactly how the market will absorb these shifting fundamentals, but motorists may want to be ready. One remaining beacon of hope is that domestic oil production would ramp up sooner than later and end the upward momentum on oil prices.”
Nationally, the highest average price for gasoline was Sept. 8 at $2.67. The lowest was July 5 at $2.23. Tennessee: the highest average price was Sept. 10 at $2.60. The lowest was July 5 at $1.99.