AAA: Gas prices at 10-month low

Gas prices remain stable two weeks ahead of the year-end holiday travel period, which is welcome news for cash-strapped motorists juggling holiday shopping and travel plans in the coming weeks.

U.S. gasoline prices today are lower than they have been since day 10 of the Libyan civil war (Feb. 24, 2011). The national average for regular grade gasoline remained unchanged over last week at $3.29 per gallon Friday.  Prices are 14 cents below month ago prices and 31 cents above year-ago prices, yet 82 cents below the all-time high of $4.11 per gallon set in July 2008.

In fact, in a strange statistical coincidence, the year-on-year premium for motor fuel has slipped to its smallest increment since Dec. 6, 2010. Gasoline today costs 32.41cts/gal more than it did on this day last year, and on this day last year, gasoline cost 31.8cts/gal more than it fetched on December 6, 2009.

Crude oil spent seven consecutive days trading above the $100 per barrel mark before reversing its upward climb below the triple-digit threshold by week’s end.  After trading as high as $102 per barrel, the commodity dropped to $98 Thursday, taking aim at its biggest weekly decline since September.  Continue reading “AAA: Gas prices at 10-month low” »

AAA: Gas prices might be on decline through end of year

Despite reaching the highest level ever for a Thanksgiving holiday weekend (averaging $3.31), gas prices continue their decline that began in mid-October and will likely continue in the week ahead, if not through the remainder of the year. Thenational average for regular grade gasoline dropped 2 cents this week to $3.29 Friday.  Prices are 14 cents below month ago prices and 41 cents above year-ago prices, yet 82 cents below the all-time high of $4.11 per gallon set over three year ago.

Crude oil began the month of December above the $100 per barrel mark for just the third time since June.  One contributing factor to oil’s advance – U.S. retail sales jumped to a record $52.4 billion during the Thanksgiving holiday weekend, a signal of economic growth in the world’s biggest crude-consuming country.  There was also optimism that European countries are participating in discussions to fortify the tenuous sovereign debt situation in the euro zone as a reason for optimism that, rather than split apart, the European Union (EU) may be moving to strengthen ties.  In addition, concern for tension betweenIran and European governments will disrupt oil exports from theMiddle East supported crude oil’s rise.  By week’s end crude oil dipped slightly, but not below $100, following signs of economic slowdown in Europe, a weaker factory sector inChina and new applications for unemployment in theU.S. rose for the second straight week, their highest level since late October.  Yet the commodity saw its first weekly gain in three weeks, closing at $100.96 Friday.

The U.S. Energy Information Administration’s (EIA) weekly report showed crude stocks rose 3.9 million barrels to 334.7 million barrels.  Gasoline stocks rose 213,000 barrels to 209.8 million barrels.  Petroleum demand continues to be poor at 17.946 million barrels per day (bpd), the poorest week for demand since June 19, 2009, when theU.S. economy was in the thick of the Great Recession.  More important, prior to the June 2009 dip, this week marks the first time since September 2001 demand has been so feeble.  Gasoline demand saw a slight upswing, rising 177,000 bpd last week, leading some to believe year-on-year deficits may be smaller than the 4 percent declines seen recently.

“Pump prices continue to decline, despite recent crude oil increases, which is welcome news for motorists who paid the highest prices ever for gasoline during the month of November,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “As the year-end holidays approach, motorists wonder if the downward trend will continue and the good news, according to analysts, is gas prices will continue to level off in the coming weeks before reaching a price bottom at some point during the winter when demand is typically low.”

The last 35 days of 2011 might get close to the performance of the first 35 days when gasoline prices were barely above $3.00 per gallon, according to Tom Kloza, chief oil analysts for OPIS.  Kloza also suggests gas prices will average $3.25 per gallon through year’s end.  Somewhere between Black Friday and Ground Hog Day prices will bottom out, with January as the likely month for the price bottom, which will become the launch pad for a spring rally that could potentially add another $1.00 to wherever the bottom occurs.

Surprise! Gas prices dropping heading into holiday travel weekend

Although gas prices are at their highest level ever for this time of year, prices at the pump dropped slightly this week as they have for the past few weeks, bringing relief to many who are preparing to take to the roads for the upcoming Thanksgiving holiday weekend. Thenational average for regular grade gasoline dropped 6 cents this week to $3.38 Friday.  Prices are 9 cents above month ago prices and 49 cents above year-ago prices, yet 73 cents below the all-time high of $4.11 per gallon set in the summer of 2008.

Crude oil soared above $100 per barrel Wednesday for the first time ever in November (and the first time since early June), yet gas prices are dropping at the pump.  Up 30 percent since early October, crude oil jumped on Wednesdayfollowing news of a pipeline reversal in the Midwest that will ease a glut of crude around the Cushing,Oklahoma delivery point.  However, concerns for the European economic outlook leading to further demand destruction caused prices to tumble 4 percent Thursday in the biggest one-day percentage loss since September 28, leading many analysts to believe crude will continue to fall in the coming week due to continued euro zone debt concerns.  Crude oil rebounded slightly Friday as the euro gained strength against the dollar, a sign the struggling European economy could possible be stabilizing.  Although crude crossed the $100 per barrel threshold mid-week, it closed the week at $97.67 per barrel, its worst weekly performance since late September.  Might recent crude oil increases drive gas prices higher in coming weeks?  Perhaps yes, however, despite increases in the commodity price throughout the past two weeks, gas prices have declined steadily.

The U.S. Energy Information Administration’s (EIA) weekly report showed crude stocks fell by 1.1 million barrels to 337 million barrels.  Gasoline stocks rose 1 million barrels to 205.2 million barrels.  Gasoline demand continues to be very poor, dropping 46,000 barrels per day (bpd) to 8.625 million bpd, due to high gas prices and a weak economy.

“Despite gas prices at their highest level ever for the month of November, prices at the pumps have leveled off and even dropped slightly this week, which is welcome news to the millions of Americans who will take to the roads in the coming days for the Thanksgiving holiday,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Although economic concerns continue to influence financial decisions for many Americans, that’s not stopping many from gassing up to travel to be with family and friends next weekend.  What can motorists expect to pay at the pump throughout the holiday season?  Analysts believe gas prices will drop slightly through the remainder of the year.”

AAA forecasts 42.5 million Americans will travel 50 miles or more from home during the Thanksgiving holiday weekend, a four percent increase from the 40.9 million people who traveled one year ago. This is the first significant increase in any holiday travel this year.Despite potentially seeing the highest ever retail gas prices at Thanksgiving, approximately 38.2 million people (90 percent of holiday travelers) plan to take to the nation’s roadways this Thanksgiving holiday weekend, a four percent increase compared to 2010 when auto travelers totaled 36.8 million. Automobile travel remains the preferred choice of transportation for holiday travelers as it is often more affordable, convenient and flexible.

Gas prices inching upward heading into Thanksgiving

Gas prices are at their highest level ever for this time of year, a time when prices at the pump typically fall.  Just two weeks out from the Thanksgiving holiday, motorists are left wondering what will happen to gas prices leading up to the busiest travel holiday of the year. Thenational average for regular grade gasoline gained 2 cents this week to $3.44 Friday.  Prices are 3 cents above month ago prices and 58 cents above year-ago prices, yet 67 cents below the all-time high of $4.11 per gallon set in July 2008.  Analysts believe gas prices will remain above $3.40 per gallon through Thanksgiving and decline, albeit slightly, through the end of the year.

American households are spending 8 percent of their income on gasoline and the nation is on track to have the highest fuel bill ever, based on statistics just compiled by OPIS Retail Group.  There is a consolation prize: The estimated monthly household cost for buying gasoline did drop in October by 3.5 percent to $332.40, thanks to a decline in retail pump prices to a national average of $3.44 per gallon, the lowest since February.  Still, when compared to last year household fuel bills are $50 per month higher.  Moreover, American’s are on track to cough up a record $490 billion for gasoline in 2011.  That would top 2008′s fuel bill of $448 billion.  Last year’s tally was around $390 billion, so the current pace of spending would exceed last year by $100 billion or 25 percent.  Year-to-date Americans have spent 8.4 percent of their income on gasoline, up from 6.7 percent last year and on track surpass the 7.9 percent number hit in 2008.

Crude oil remained volatile again this week, reacting to national and international economic news.  New claims for unemployment benefits in the U.S. fell last week to their lowest level since early April and the trade deficit unexpectedly shrank in September, both indicators of a recovering economy that will ultimately boost fuel demand.  Progress in Italy’s efforts to resolve its debt problems, in addition to leadership changes in bothItaly and Greece, have demonstrated Europe’s willingness to take the necessary steps to contain the region’s debt crisis.  The commodity closed at a 15-week high Thursday of $97.78 and continued gains Friday to close the week at $98.99, marking its sixth consecutive weekly gain and a nearly 30 percent increase since early October when crude was $75 per barrel.  Some analysts believe crude oil will cross the $100 per barrel threshold in the not too distant future.  In 2008, crude jumped to a record high of $147 per barrel.

The U.S. Energy Information Administration’s weekly report showed crude stocks fell by 1.4 million barrels to 338.1 million barrels.  Gasoline stocks dropped 2.1 million barrels to 204.2 million barrels.  Gasoline demand remained poor, at 8.671 million barrels per day (bpd), despite a 175,000 bpd increase over last week.

“Thanksgiving is less than two weeks away and with most holiday travelers planning to take to the road to get to their holiday destinations, many are left wondering how much higher gas prices will creep at a time of year when they are typically on the decline,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Gas prices have been anything but typical this year, which leaves motorists extremely skeptical when it comes to price trends.  Although most motorists will unlikely alter their travel plans for the Thanksgiving holiday, they will undoubtedly be asking themselves why prices are on the rise and how long the trend will continue.  This remains to be seen, although some analysts believe prices will remain steady or even slightly lower through the end of the year before climbing into potentially record-high territory next spring and summer.”

Atypically high gas prices for this time of year have left motorists wondering what is in store in the coming months and into next year.  Despite projections for slight declines in prices through the end of the year, crude oil volatility and potential demand resurgence due to positive economic indicators could send gas prices well above the 2008 record high of $4.11, perhaps as high as $4.25 to $4.50 per gallon.

Positive economic news could boost gas prices

Despite a roller-coaster week for crude oil, gas prices remained relatively steady this week, even dropping a few pennies in some areas.  The national average for regular grade gasoline dropped 2 cents this week to $3.45 Friday.  Prices remain 2 cents below month ago prices.  Prices remain 64 cents higher than year ago prices, yet 66 cents below the all-time high of $4.11 per gallon set in July 2008.

Crude oil crossed over the $90 per barrel threshold on Monday for the first time since mid-September.  The commodity continued to trade in the $90 to $95 range throughout the week, including a rally of more than 4 percent on Thursday upon news of a deal to resolve the Greek debt and euro zone debt crisis.  Additional support for crude oil came from data showing the U.S. gross domestic product grew at its fastest pace of the year in the third quarter, easing some investor concern that the U.S. would lapse into another recession.  Also supporting crude oil this week was a stronger U.S. dollar, which makes commodities prices in dollars more expensive for holders of other currencies.  Despite a slight dip in price on Friday, crude oil saw weekly gains for the fourth straight week, closing at $93.32 Friday.

The U.S. Energy Information Administration’s weekly report showed crude stocks rebounded from several weeks of declines, rising 4.7 million, to 337.6 million barrels.  Gasoline stocks dropped 1.4 million barrels to 204.9 million barrels.  Over the last few years gasoline stocks typically bottom out in late October or early November before rebounding.  Gasoline demand over the past four weeks dropped to 8.501 million barrels per day (bpd), a level reached a few times this year, but to find demand number below 8.5 million bpd one would have to go back to January 2004.  Compared to the same week last year, demand is off by 9 percent.

“With positive economic news at home and abroad, confidence is slowly being restored in the global economy, abating fears of a double-dip recession,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Although analysts believe gas prices will average about $3.40 per gallon through Thanksgiving, continued economic progress and strength in the crude oil markets in the last two months of the year would result in gas prices creeping upward to mimic commodity market growth.”

Motorists have been subjected to a rollercoaster ride of prices in recent weeks.  What should we expect in the weeks and months ahead? Some analysts believe motorists will see gas prices remain lower in the short term, averaging $3.40 per gallon through Thanksgiving.  However, they also see another vicious winter-spring rally ahead that could send gas prices as high as $4.25 per gallon in early 2012.

Gas prices inch upward for second straight week

Earlier this month gas prices were falling at about 1-cent per day and were expected to continue their decline through the autumn and early winter months.  However, over the past two weeks prices at the pump have shifted gears, rising at the rate of about 1-cent per day or even more in some areas.  In the last week, the national average for regular grade gasoline rose 3 cents to $3.47 Friday, yet prices are 10 cents below month ago prices.  Prices remain 64 cents higher than year ago prices, yet 64 cents below the all-time high of $4.11 per gallon set in July 2008.

Crude oil continued to trade in the $80 to $90 range throughout the week, inching upward early on in the week, then pulling back Wednesday and Thursday.  Affecting the commodity this week – France and Germany have assured the markets that European leaders will present a comprehensive solution to the euro zone debt crisis at a summit this weekend and next week.  Also, U.S. economic data remains weak (indicating less demand for fuel), however, the Federal Reserve showed a slight increase in consumer spending in September.  Lastly, the demise of former Libyan leader Moammar Gadhafi will speed up Libya’s oil industry, which has already ramped up to 430,000 barrels per day after being off line for most of the spring and summer months.  Analysts believe crude oil will continue to be range bound between $85 to $90 range in the short term, barring any significant national or international news event that would move the needle in either direction.  Crude closed the week at $87.40.

The U.S. Energy Information Administration’s (EIA) weekly report showed crude stocks fell sharply by 4.7 million barrels, to 332.9 million barrels.  Gasoline stocks dropped 3.3 million barrels to 206.3 million barrels.  Gasoline demand over the past four weeks was 8.598 million barrels, the lowest level since early February and 1.5 percent behind the same time last year.

“For the second straight week, motorists continue to feel price hikes at the pumps,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Economic fears, nationally and internationally, have fueled the recent rise in crude oil prices, which ultimately leads to gas price increases.  Gas prices could buck typical downward seasonal trends with an autumn and early winter upswing, rather than previously forecast declines.”

Motorists will likely continue to feel the pinch at the pump in the week ahead, barring any unforeseen circumstance that would tumble crude oil prices or affect demand, as gas prices continue to inch upward.  As crude oil tests the $85 to $90 per barrel range, gas prices will likely break through the $3.50 per gallon mark in the coming week and potentially beyond.

Gas prices inch upward

After four consecutive weeks of declines, gas prices reversed the trend, edging up yet again.  In the last week, the national average for regular grade gasoline rose 5 cents to $3.44 Friday, yet prices are 19 cents below month ago prices.  Prices remain 61 cents higher than year ago prices, yet 67 cents below the all-time high of $4.11 per gallon set three summers ago.

An upward crude oil trend sent prices above the $86 per barrel mark by mid-week came, due in part to a weakened U.S. dollar.  A strengthened U.S. dollar and positive jobs data later in the week trumped crude inventory data and unraveled the commodity’s upward trend, sending prices down 1.6 percent Thursday to the lowest close since October 7.  Though crude bounced back Friday on speculation Europe may be able to contain its debt crisis and that the U.S. economy will slowly begin to recover (increasing demand).  At Friday’s close, crude oil settled at $86.80 for its second straight weekly gain.

In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks rose 1.3 million barrels, to 337.6 million barrels (a third straight increase and a 6.4 percent below year-ago levels).  Gasoline stocks fell 4.1 million barrels to 209.6 million barrels (down 1.9 percent).  Gasoline demand over the past four weeks was 0.7 percent lower than a year ago, averaging 8.9 million barrels a day.

“After several weeks of relief at the pump, motorists are now faced with the reality of a reversal of trend,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Gas prices mirrored crude oil increases this week, ending a 4-week run of gas price declines.  Motorists may want to fill up their tanks this weekend, as some analysts suggest gas prices will rise gradually over the next week or two, some rising as much as 10 cents by Halloween.”

As crude oil prices increase, so do gas prices.  How long will they rise and how high will they do remain uncertain, however, analysts believe that as crude oil settles back in the $80 to $90-per barrel range gas prices will follow suit, crossing back over the threshold of $3.50 per gallon nationally and potentially increasing as much as 10 cents per gallon by Halloween.

More good news: Gas prices continue downward trend

Gas prices continued their downward trend for the fourth consecutive week, which has been welcome news for cash-strapped motorists.  The national average for regular grade gasoline dropped to $3.39 Friday, down 6 cents in the past week and down 27 cents in the past month.  Prices remain 62 cents higher than year ago prices, yet 72 cents below the all-time high of $4.11 per gallon set in July 2008.

Crude oil rallied for three days of solid gains this week, reacting to shrinking supplies, better-than-expected economic data, a weakened U.S. dollar and signs Europe can control its debt crisis – all factors thwarting fears that demand will suffer.  Despite gains this week, crude oil settled at $75.67 on Wednesday, its lowest settlement in over a year (September 23, 2010) and in the past month the commodity is down more than 15 percent.  Employment data released Friday showed more jobs were created in September (103,000), not enough to send the unemployment rate below 9 percent, but perhaps enough to ease some concerns of an economic recession.  After spending the majority of the week below the $80/barrel mark, crude oil closed the week up 5 percent at $82.98 Friday, its first weekly gain in three weeks.

In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks dropped 4.7 million barrels, to 336.3 million barrels (lowest level since January).  Gasoline stocks fell 1.1 million barrels to 213.7 million barrels.  The EIA also noted total petroleum demand levels were relatively flat, with the four-week average for all products running 1.3 percent below the same period last year.

“Prices at the pump continue their downward trend, bringing much needed relief to cash-strapped motorists,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Gas prices have dropped to seven-month lows in recent weeks and although prices are not ‘low’ by any means, they have dropped almost 60 cents a gallon since peaking at $3.98 back in May of this year.  A 60-cent drop in gas prices translates to an annual household savings of $748.”

Although gas prices continue to fall, which is welcome news to motorists who have undoubtedly felt the pressure from rising prices and a poor economic climate, the drop is not cause for celebration.  Crude oil, which makes up almost 70 percent of gasoline prices, has declined because investors are worried the global economy and demand for crude oil are headed for a slowdown.  Should the economy avoid a recession, analysts believe gas prices could rebound next year.

AAA: Gas prices continue dip

Gas prices across the country continued to decline, an upside of recent domestic and international economic worries, sending the national average price below the $3.50 per gallon mark for the first time in seven months. The national average for regular grade gasoline dropped to $3.45 Friday, down 9 cents in the past week and down 17 cents in the past month.  Prices remain 76 cents higher than year ago prices, yet 66 cents below the all-time high of $4.11 per gallon set in July 2008.

Crude oil rebounded somewhat early this week, following last week’s dramatic declines.  Contributing to the commodity’s slight upswing this week – U.S. weekly jobless benefits claims fell to a five-month low, a weakened U.S. dollar and German lawmakers approved a euro zone bailout fund.  However, crude oil could not sustain its upward momentum and slumped more than 3 percent on Friday following weak economic indicators fromChina, ongoing concerns about Europe’s debt problems and a stronger dollar.  Crude oil prices have dropped sharply this quarter on fears of aU.S. recession and concern thatEurope’s debt crisis will spread and damage the global economy further, ultimately hindering demand growth. U.S. crude has fallen nearly 14 percent this quarter, the sharpest drop since the last quarter of 2008.  Crude oil closed the week at $79.20.

In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks rose 1.9 million barrels, to 341 million barrels.  Gasoline stocks rose 800,000 barrels to 214.9 million barrels.  The EIA also reported revised data showingU.S. oil demand in July fell by 4% from a year earlier to 18.555 million barrels a day and was the lowest level for the month since 1996.  The drop came as gasoline demand fell 3.7% to 8.96 million barrels a day, the lowest level since 2000.  Revised total demand for July, typically the peak month of the summer driving season, was 2.3 percent below the earlier estimate, with demand for gasoline, the most widely used petroleum product, 1.3 percent lower than preliminary data showed.

“Not since March of this year have we seen the national average gas price below $3.50 per gallon,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Now that crude oil has settled in the $80 range, down from a three-year high this spring ($113.93 on April 29), gas prices are shifting downward as well, bringing much needed relief for cash-strapped motorists. American consumers are spending about $1.3 billion a day on their fuel purchases. Back on May 5 when retail gasoline prices peaked at 3.98 per gallon, we were forking over $1.51 billion a day.  That’s a drop of $200 million per day, but it is still nearly $400 million more per day than we were backing on January 3, when pump prices were at their lowest price of the year – averaging $3.07 a gallon.” Analysts believe the recent drop in prices will likely last through the fall, but caution that what we see now won’t be the ‘new normal,’ but rather a starting point for winter and spring prices.”

How much lower will gas prices go?  Some analysts believe the national average price could flirt with $3.00 per gallon by the end of this quarter, however, they caution that gas prices will likely rebound in early 2012.  Although prices have declined in the past month, they aren’t exactly low.  Gas prices are up 28 percent from a year ago and estimates showU.S. motorists are spending about $1.3 billion every day at the pump, putting the country in track to spend almost $490 billion on gas this year – the most in history.

Gas prices continue recent decline

Gas prices continued to decline for the second straight week, due to a combination of restored production, the switch to less-expensive autumn/winter blended gasoline and lower crude oil prices.  The national average for regular grade gasoline dropped to $3.54 Friday, down 7 cents in the past week and down 4 cents in the past month.  Prices remain 82 cents higher than year ago prices, yet 57 cents below the all-time high of $4.11 per gallon set in July 2008.

Crude oil dropped to its lowest level in six weeks following the Federal Reserve noting a bleak economic outlook and a warning of “significant downside risks,” followed by the Fed replacing $400 billion in short-term debt and long-term Treasuries in an attempt to spur growth.  Also contributing to crude oil’s decline were recession fears around the world due to Chinese economic contraction and worries about stability in the Eurozone.  A global recession would significantly affect crude oil demand, especially in theU.S., the world’s largest crude oil consumer.  A strengthening U.S. dollar also fueled the commodity’s decline this week.  As the financial climate overseas becomes more uncertain, U.S. dollars become a more attractive investment, driving up the value of the dollar.  Commodities – including crude oil – are traded in U.S. dollars, and as the dollar strengthens relative to currencies abroad, the effective price of these products for those outside of the U.S. becomes more expensive.  Oil futures become a less attractive investment and prices are pressured downward.  Crude oil closed the week at $79.85, down more than 9 percent.

In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks dropped 7.3 million barrels, to 339 million barrels.  Gasoline stocks rose 3.3 million barrels to 214.1 million barrels.  Gasoline demand measured at 8.858 million barrels per day (bpd), up 10,000 bpd from last week and slightly above the 2010 pace.  Most analysts believe demand is probably running about 2 percent behind last year, but they stress it has stabilized after a late-August plunge.

“Relief at the gas pump continues for motorists as crude oil prices drop and the change over to the less-expensive autumn/winter blended gasoline begins, helping to push gas prices lower,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic.  “Wholesale gas prices have dropped 40 cents a gallon since September 1, which also bodes well for consumers.” How much longer will prices drop and how much lower will they go?  Analysts believe gas prices will continue to fall in the coming weeks, into the $3.30 to $3.50 per gallon range, bringing even more relief to cash-strapped motorists.  Also of note, thefederal tax on gasoline, which is 18.4 cent a gallon, is expiring next week, on September 30.  Motorists won’t see or save a penny of that, though. If it expires, it could jeopardize the federal government’s ability to reimburse the states for projects already under way.”

Prices at the pump have fallen in recent weeks and some analysts believe the trend is expected to continue into the fall, dropping to $3.30 to $3.50 per gallon nationally.  A drop in gas prices is typical for the last 100 days of the year as demand diminishes slightly.  However, as winter 2012 approaches, analysts warn of strong updrafts for crude oil and, in turn, gasoline.  Continuing concerns in the Middle East and North Africa, coupled with the potential for tighter oil supplies due to global economic growth could send gas prices knocking on $4 per gallon by spring 2012.

Gas prices recede

After two consecutive weeks on the rise, gas prices dropped slightly this week as production and refining capacities were restored following tropical storm activity in recent weeks.  The national average for regular grade gasoline dropped 5 cents this week to $3.61 per gallon Friday.  Prices remain 3 cents higher than month ago prices and 88 cents higher than year ago prices, yet they hold 50 cents below the all-time high of $4.11 per gallon set in July 2008.

Crude oil gained nearly 3 percent early this week, its fourth straight weekly gain and its longest winning streak since July, as prices inched ever-closer to the $90 per barrel mark.  Action to contain Europe’s debt crisis (easing concern about falling oil demand) and weakness in the U.S dollar contributed to the commodity’s steady growth this week. U.S. economic news was mixed. New claims for U.S. jobless aid rose unexpectedly last week and factory activity along much of the Eastern seaboard contracted early this month, bolstering the case for more action to support the struggling economy.  To the contrary, U.S. consumer price inflation picked up in August at a faster pace than economists were expecting and the consumer price index rose 0.4 percent in August, according to the Labor Department.  PositiveU.S. economic news, coupled by potential additional government stimulus efforts, will likelyincrease demand for crude oil and ultimately gasoline.  Crude oil closed the week at $87.96.

In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks fell 6.7 million barrels, to 346.4 million barrels, primarily due to the shut down of platforms in the Gulf of Mexico due to Tropical Storm Lee.  Gasoline stocks rose 1.9 million barrels to 210.8 million barrels.  Gasoline demand measured at 8.848 million barrels per day (bpd) and total petroleum demand measured at 18.654 million bpd, down 732,000 bpd and 562,000 bpd behind last year.  TotalU.S. petroleum demand on a four-week basis last slipped below 19 million bpd in July (a slip that was short-lived).

“Motorists found some much-needed relief at the gas pump this week asU.S. oil and natural gas production in theGulf of Mexico was restored post-Tropical Storm Lee, sending gas prices downward for the first time in almost three weeks” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “In addition, the change over from summer blended gasoline to less-expensive autumn/winter blended gasoline began this week, which will likely bring even more relief for motorists who have been grappling with high gas prices throughout the summer months.”

The switch from summer blended gasoline to the less-expensive autumn/winter blended gasoline began this week.  The transition typically results in lower prices at the pump for motorists.  However, should crude oil prices continue to increase, relief at the pump from the switch to autumn/winter blends could be muted.  Relief or not, some analysts believe we may be witnessing the most expensive last four months of any year for gasoline, noting that U.S. consumers are on course to spend about $540 billion on gasoline this year – about $50 billion above the previous record.