Most states see first gas price drop in weeks as demand declines

Oct. 16 (UPI) -- The average price of a gallon of gasoline in U.S. service stations fell in mid-October by an average of two cents on-week amid declines in demand -- the first such drop in three weeks.

Most states have seen price declines "with the exception of a handful of states, some of which were impacted by fuel disruptions on the West Coast and in the Southeast," the AAA said in its weekly analysis of gas prices across the United States.

Gasoline prices "may be signaling that they are taking a turn," said Jeanette Cassellano, AAA spokeswoman, said in a press release.

Hurricane Michael, which made landfall on Oct. 12 in Florida, caused retail fuel shortages along its path in Alabama, Florida, Georgia, and both North and South Carolina, and also disrupted deliveries to refill the stations.

"Roadway clean-up efforts are underway and as power is restored, fuel deliveries will be a priority," AAA said in the report.

A natural gas pipeline rupture in the North West of the country is one cause of localized spikes during the week that is expected to continue into this week. The rupture disrupted deliveries to three refineries in the area that use natural gas to power infrastructure used to process crude oil into gasoline, though they are reportedly starting to resume normal operation.

The average price in the U.S of retail gasoline as of mid-October was $2.89 per gallon, with the biggest weekly change a 14 cent per gallon decline in Ohio, followed by a 12 cent per gallon decline in Michigan.

Fuel prices in Oregon and Washington rose 9 cents per gallon due to the pipeline rupture-related disruptions, and prices in Georgia rose an average of 2 cents per gallon as a result of the shutting down of a pipeline stub line running from Atlanta to southern Georgia.

Inventories also saw a decrease for the second week in a row, dropping 1.2 million barrels -- though levels are higher than they were a year ago, with 78.3 million barrels in inventory.

Despite having higher inventories, gasoline prices are 42 cents per gallon more expensive than a year ago. Gasoline retail prices are also four cents higher per gallon than in September.

Separately, Reformulated Blendstock for Oxygen Blending, or RBOB, futures for November delivery on the CME were being traded as of Tuesday morning at 1.96 cents per gallon, compared with 1.88 cents per gallon at the start of the month.

Ethanol futures for November delivery were traded at 1.29 cents per gallon, just off from 1.30 cents per gallon at the start of the month.

Retail gasoline sold in the U.S. is a mix of blendstock and ethanol, in varying proportions, in addition to other additives.