The upward trend continued into 2018, as gas prices had the most expensive start to the year in four years. Tennessee gas prices averaged $2.26 Jan. 1, which was 13 cents more than the year before. The state average Wednesday of $2.27 was 3 cents more than last week and 13 cents more than the same time last year.
The most expensive gas price averages in Tennessee were in Jackson at $2.32, Nashville at $2.28 and Memphis at $2.28. The least expensive gas price averages in Tennessee were in Chattanooga at $2.20, Clarksville-Hopkinsville at $2.20 and Cleveland at $2.23.
“After a quick jump at the pump last week, prices are relatively stable right now across the southeastern U.S., and should begin to take a downward turn soon,” said Mark Jenkins, spokesman for AAA. “Gas prices normally decline during January and February, as gasoline demand hits the lowest levels of the year. The pump-price plunge has faced resistance from oil prices, which have been trading at two-year highs. Oil analysts believe the oil market is somewhat inflated due to geopolitical tensions and supply concerns, but prices should decline soon.”
Energy prices will be higher this year, according to the Energy Information Administration. The EIA expects gas prices to average $2.51 in 2018, 12 cents more than the annual average in 2017. The EIA also projects oil prices will average $52.77 per barrel, nearly $2 more than last year’s average. Oil analysts at Moody’s Investors Service expect crude oil prices to remain at $40-$60 per barrel.
Oil prices got a boost toward the end of 2017, carrying into 2018. Crude settled above $60 during the last two sessions – the highest daily settlements since mid-2015. The late-year boost was due to multiple supply disruptions like the North Sea Forties and Libyan pipeline outages, protests across Iran and the cold snap across the U.S., which increased demand for heating oil. The pipeline issues were resolved, and the protests do not appear to be impacting oil production. This should help reduce the upward pressure on oil prices.
Last year’s increasing oil prices, especially in the fourth quarter, led to increased investment in production and drilling. This allowed the U.S. to reach its highest crude production level – 9.637 million barrels per day in October – since April 1971, officially confirmed by EIA last week. It represented a roughly 10 percent gain from the same month in 2016 and a 167,000 barrels-per-day increase from September.
For 2018, U.S. crude production is expected to hit 10 million barrels per day for the first time, helping the country to meet domestic demand and expand its export prowess to countries that have growing energy demands around the globe. The total number of active rigs, 747, is 222 more than the total active number of rigs at the beginning of 2017. No active oil rigs were added last week, according to Baker Hughes, Inc.
Nationally, the highest average price for gasoline was Sept. 8 at $2.67, and the lowest was July 5 at $2.23. In Tennessee, the highest average price was Sept. 10 at $2.60, and the lowest was July 5 at $1.99.