Energy In-Depth: Gas Prices At Lowest August Level Since 2004, Should Keep Falling

Aug 28, 2015

Average U.S. gas prices this week are at the lowest levels for this time of year since 2004 due to the steep decline in the cost of crude oil, according to AAA.

Gas prices have dropped recently despite ongoing refinery problems, and prices should continue to fall this autumn due to declining demand and the switchover to winter-blend gasoline. Today’s national average price of gas is $2.53 per gallon, which is 12 cents less than a week ago and 90 cents less than a year ago. Pump prices are now 33 cents per gallon below the 2015 peak price reached on June 15.

BP’s largest crude distillation unit at its Whiting, Indiana refinery remains out of commission, due to a malfunction reported on Aug. 8 that triggered dramatically higher prices in the Great Lakes region. Repairs to the unit are reported to be ongoing, and the company has yet to release a date they expect the unit to return to production.

Motorists in the Pacific Northwest continue to pay the nation’s highest averages, with five of the six states with averages above $3 per gallon located in this region. Average prices in Arkansas are $2.25 a gallon, 15 cents less than a week ago and 94 cents off pump prices a year ago.

STATE REGULATORS SET STAKEHOLDER MEETINGS TO DEVELOP CLEAN POWER PLAN ROADMAP

The Arkansas Department of Environmental Quality and the state Public Service Commission announced they would reconvene stakeholder meetings on Oct. 9 to begin the process of developing a state plan to meet the EPA’s requirement to reduce carbon emissions at 19 power plants across the state. ADEQ Director Becky Keogh and PSC Chair Ted Thomas held a press conference on Monday at ADEQ headquarters in North Little Rock to outline the state’s response to what they called a “relaxed” emission standard for putting Arkansas on track to cut carbon pollution from the power sector 36% below 2005 levels by 2030.

DOMESTIC MARKET FOR DISTRIBUTED WIND TURBINES FACING CHALLENGES

The domestic market for distributed wind turbines has weakened since the record capacity additions in 2012, according to the U.S. Energy Information Administration.

Last year’s installations of mid-size and small wind turbines were the lowest in a decade as relatively low electricity prices, competition from other distributed energy sources, and higher permitting and other nonmaterial costs have presented challenges to the U.S. distributed wind market, the EIA said in a report released Thursday (Aug. 27).

Most distributed wind turbines installed in 2014 were connected directly to distribution lines to serve local loads. Distributed wind turbines can also be installed either off-grid or grid-connected at local sites to offset all or a portion of a site’s electricity consumption.

Based on information in the U.S. Department of Energy’s Distributed Wind Market Report, most of the 2014 distributed wind capacity was installed on institutional sites, such as schools, universities, and electric cooperatives. Government installations on city, municipal, or military facilities made up more than one quarter of 2014 installed capacity. Other sectors (industrial, commercial, agricultural, and residential) were relatively small in terms of capacity.

ENTERGY CORP.’S LOUISIANA UTILITIES COMBINE UNDER ONE BANNER

Nearly two years after Entergy Arkansas Inc. broke free from its system agreement with parent company Entergy Corp., customers of Entergy Louisiana LLC and Entergy Gulf States Louisiana LLC will soon be served by a single utility company created through a transaction approved Wednesday (Aug. 26) by the Louisiana Public Service Commission. Read more here.

FITCH: OIL PRICE EFFECT ON U.S. LOCALS WILL VARY

The recent decline in oil prices has raised the pressure on certain cities, counties and single-purpose districts in oil-producing states, Fitch Ratings said in a research note this week.

“In our view, some will be able to raise taxes (and other revenue sources), cut spending and use reserves. Others have sufficient size and economic diversity to weather the economic stresses. All will be affected to varying degrees by the decline,” Fitch said of West Texas Intermediate (WTI) crude oil prices that fell below $40 per barrel for the first time since 2009.

The Wall Street rating service also said that energy-dependent cities like Houston are facing some risk due to the decline in oil. “Most major regional and multinational energy companies have offices in the Houston area, exposing it to employment pressures,” Fitch said. “Houston has limited ability to raise property taxes to compensate for revenue losses, as Proposition 1 limits tax revenue increases to the lesser of 4.5% or the combined percentage increases in population and consumer inflation.”