LEXINGTON, Ky. –Kentuckians are continuing to see falling gas prices across most of the Bluegrass, while nationally the gas price average is at its cheapest in six months.

Kentucky’s average gas price is now at $2.56, dropping another 5 cents from last week. The Commonwealth has seen gas prices plummet 28 cents in the past month, one of the country’s largest month-over-month decreases at the pump.

The drop over the past month has been even more dramatic in Lexington (-47 cents) where motorists are now paying $2.44 on average, about 9 cents less than a week ago. Lexington is now closing in on average prices not seen since a year ago, while the average gas price for all of Kentucky remains 12 cents above a year ago.

Analysts says if demand continues to drop, gas prices could get even cheaper.

“This price drop is happening at a time that analysts previously thought it likely we would see gas prices increase due to the White House’s re-imposition of sanctions on Iran, some of which target the country’s energy sector and impede its ability to export oil,” said Lori Weaver Hawkins, manager, public and government affairs, AAA Blue Grass. “But with the market having already reacted to the pending Iran sanctions throughout the summer months, and demand dropping, analysts are now saying motorists may have seen the worst in terms of retail prices for the year.”

Market Reaction to Sanctions Likely to Have Peaked

In May, when it was announced that the sanctions would take effect in November, the market reacted quickly with crude oil prices (WTI) spiking as high as $77/barrel over the summer. At the same time, Iran’s exports began to dip. Today, they are reported to be about one million barrels per day less than in May, while crude oil prices have stayed below $70/barrel for two weeks.

The re-imposed sanctions on Iran’s crude exports have failed to ignite fears in the market about constrained global supplies over the winter, as the U.S. will reportedly issue waivers that enable some of Iran’s top export customers to continue importing its oil.

Steady growth in crude inventories for the sixth consecutive week has helped to check excessive increases in crude prices. “If the crude oil market remains steady, gas prices are likely to continue to fall as much as 10 cents in the near-term,” said Weaver Hawkins.

That being said, should any factors cause an upward shift in crude oil prices, the trend of cheaper gas prices would likely be temporary.

Prices Still Dropping Across Much of the Commonwealth

While most of Kentucky saw lower gas prices week over week, Henderson saw a 3 cent climb while Louisville saw prices climb 6 cents.

Lexington motorists are now paying $2.44, compared with $2.53 last week and $2.91 a month ago. With the latest decline, gas prices in Lexington remain just two cents higher than a year ago.

States in the Central U.S. See Some of the Greatest Declines in Price

Motorists in seven Great Lakes and Central states are seeing some of the country’s largest month-over-month decreases at the pump, including: Ohio (-35 cents), Indiana (-35 cents), Michigan (-32 cents), Kentucky (-28 cents), Iowa (-25 cents), Missouri (-24 cents) and Illinois    (-23 cents). The cheaper pump prices come as regional refinery maintenance season begins to wrap-up and are in-line with the national trend. On the week, four states land on the top 10 list of largest changes in the country: Ohio (-12 cents), Michigan (-9 cents), Indiana (-9 cents) and Missouri (-7 cents).

Compared to a year ago, only four states in the country have cheaper gas prices and they are all Great Lakes and Central states. Ohio ($2.52) and Indiana ($2.61) are both down 12 cents while Illinois ($2.76) and Michigan ($2.71) are down two cents compared to the same time last year. Kentucky remains 12 cents higher than a year ago.

Regionally, gas prices dropped amid stocks plummeting by 2.5 million barrels to total the lowest level of the year at 47 million barrels, according to Energy Information Administration (EIA) data. Typically, a large draw and low supply levels would push prices higher. However, the region saw lots of volatility in gas prices throughout the summer and early fall, which is continuing.

National Gas Price Average at Cheapest Level Since April

At $2.76, the national gas price average is at its cheapest in six months (end of April). On the week, motorists in every state but Hawaii are paying as much as a nickel less to fill-up. Today’s national average is six cents less than a week ago,15-cents less than a month ago but  24-cents more than a year ago. As demand continues to fall, the nation’s average gas price could fall with it.

Quick Stats

The nation’s top 10 largest weekly decreases are: Ohio (-12 cents), Michigan (-9 cents), Indiana (-9 cents), Delaware (-8 cents), Oklahoma (-8 cents), Texas (-7 cents), Maryland (-7 cents), Missouri (-7 cents), Florida (-7 cents) and Georgia (-7 cents).

The nation’s top 10 least expensive markets are: Delaware ($2.44), Missouri ($2.46), South Carolina ($2.46), Oklahoma ($2.47), Texas ($2.48), Louisiana ($2.49), Mississippi ($2.49), Alabama ($2.49), Arkansas ($2.51) and Virginia ($2.52).

At the close of Friday’s formal trading session on the NYMEX, WTI (crude oil used as a benchmark in oil pricing) dropped 55 cents to settle at $63.14. Oil prices moved lower last week as total domestic crude inventories grew by 3.2 million barrels last week, according to the EIA’s latest weekly petroleum status report. Stocks now sit at 426 million barrels, which is 28.9 million lower than the level seen at this time last year, but the highest level since mid-June.

Steady growth in crude inventories for the sixth consecutive week has helped to check excessive increases in crude prices. Moreover, re-imposed sanctions on Iran’s crude exports have not ignited fears in the market about constrained global supply this winter, since the U.S. will reportedly issue eight waivers that allow some of Iran’s top export destinations to continue importing its oil. Oil prices could remain flat or continue falling this week due to reduced concerns about a global crude supply shortage as a result of the sanctions.

AAA offers these tips to motorists to save at the pump:

• If your vehicle’s engine does not require premium or mid-grade fuel, don’t buy it.  Using anything other than regular grade is simply a waste of money.
• Don’t top off your gas tank. Stop filling after the automatic nozzle shuts off the second time.
• If you have to replace a gas cap, make sure it is the right one for your car. An ill-fitting cap will increase emissions and trigger the “check engine” light.
• Keep track of gas mileage. If you notice a sudden decrease in fuel economy, have your vehicle checked by a technician to ensure it is operating properly.
• Check for proper tire pressure, which can fluctuate greatly with changing temperatures.

• 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.

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

AAA has a variety of resources to help motorists save on fuel: 

• Fuel Price Finder (AAA.com/fuelfinder) locates the lowest fuel price in your area. 

• AAA Gas Cost Calculator (GasPrices.AAA.com/AAA-gas-cost-calculator/) helps budget travel expenses. 

• TripTik Mobile (AAA.com/mobile) plots fuel prices along your travel route. 

• AAA's Member Rewards Visa® Credit Card (AAA.com/financial/AAAvisa.htm) accumulates double points on fuel purchases.

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Mailing Address:
3710 Palomar Centre Drive
Lexington, KY 40513

AAA provides automotive, travel and insurance services to over 59 million members nationwide and more than 975,000 members in Maryland.  AAA advocates for the safety and mobility of its members and has been committed to outstanding road service for more than 100 years.  The not-for-profit, fully tax-paying member organization works on behalf of motorists, who can now map a route, find local gas prices, discover discounts, book a hotel and track their roadside assistance service with the AAA Mobile app for iPhone, iPad and Android.  For more information, visit AAA.com.