Gasoline in the Pittsburgh area dipped 5 cents in the last week to $2 a gallon today, the lowest prices since April 2009.
The forces behind the price plunge are the same that caused prices to begin falling in fall of 2014: a global oversupply of crude oil due to advancements in drilling technology coupled with demand that has not grown in the same way.
More recently, however, ceaseless production from the Middle East — including 500,000 more barrels a day expected from Iran now that Western sanctions have been lifted — along with a slowing Chinese economy has put investors over the edge. Global crude oil prices, which account for about two-thirds the price of a gallon of gasoline, fell as low as $27 a barrel last month and languish at about $34 a barrel today. (During the summer months of 2014, crude oil hovered around $120 a barrel.)
Gasoline is even cheaper than analysts expected a few months ago. As local prices fell to a 6-year low around Thanksgiving, GasBuddy projected gallon prices to bottom out around $2.15 before rising as refineries shut down for routine maintenance in the spring.
But Pittsburgh — and the rest of the country — has continued its decline into February. The national average fell 3 cents in the last week to $1.79 a gallon today, the site reported.
On Jan. 29, Pennsylvania’s statewide average fell below $2 a gallon, leaving just seven other states above that mark: Oregon at $2.01; New York at $2.05; Washington at $2.16; Nevada at $2.28; Alaska at $2.39; California at $2.58; and Hawaii at $2.63.
Meanwhile, states in the Great Plains and Midwest are seeing the lowest prices: Oklahoma at $1.46; Missouri at $1.50; Kansas at $1.57.
“Commodities markets are attempting to dig themselves out of their recent hole," Will Speer, senior petroleum analyst for GasBuddy, wrote in a press release this morning. He noted crude oil futures have lost 18 percent of value in January, and U.S. gasoline inventories are 245 million barrels — the highest since March 1990.
“Ample supply has been attributed as the cause of prices falling at the pump,” Mr. Speer wrote.
Daniel Moore: email@example.com, 412-263-2743 and Twitter @PGdanielmoore.