The national average price of gas increased this week for the first time in nearly three weeks, but average prices are still at levels not seen since January 2009. Today’s national average price of $1.71 represents an increase of a penny per gallon on the week, a decrease of 15 cents per gallon on the month and a savings of 57 cents per gallon compared to this same date last year.
At the close of Friday’s formal trading on the NYMEX, WTI was up 20 cents on the week, settling at $29.64 per barrel. Speculation about future supply and demand is contributing to swings in the global price of crude oil. Despite the lower price environment, there has not yet been a major reduction in U.S. oil production.
The Energy Information Administration (EIA) cited another effect of decreasing oil prices and increasing inventories of crude oil worldwide – a dip in the price of on-highway diesel fuel. The price of diesel fell below the $2 mark earlier this week for the first time since February 2005.
“The process to bring summer-blend gasoline to market (mandated by the EPA by May 1), in addition to annual refinery maintenance, is beginning to put a damper on the pump price slide throughout the Mid-Atlantic region,” said Martha Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Both of these factors will cause prices to be higher than they are now by Memorial Day.”
AAA believes prices are likely to be a good deal higher by Memorial Day than they are today. Production is beginning to drop as many refineries prepare for seasonal maintenance in advance of the summer driving season. In addition, some refineries reportedly have cut production because of abundant supplies and low prices. Industry analysts expect pump prices to rise in the coming months due to fluctuations in supply and demand associated with the maintenance process. However, unlike previous years, gasoline inventories are reportedly at higher-than-normal levels and the price of crude oil remains low.