AAA: Gas prices rolling back as summer driving season rolls on

Despite international turmoil, prices at the gas pump continued a mid-summer slide.  The national average price for regular unleaded gasoline decreased to $3.54 per gallon Friday, which is the lowest price since March 29.  Friday’s average price is down five cents from one week ago, 14 cents lower than one month ago and 12 cents lower than year ago prices.  The national average price of gas has fallen for 28 consecutive days due to abundant refinery production, even as geopolitical tensions gain global attention.

Russia and Ukraine returned to the forefront this past week when Malaysian Airlines Flight 17 crashed in eastern Ukraine in an area controlled by pro-Russian separatists.  Prior to the crash, the Obama Administration announced a new round of sanctions against Russia’s energy and financial sectors. Members of NATO and the European Union are also debating stronger sanctions against Russia, which could potentially impact global markets.  Additionally, intensifying violence between Israeli and Hamas forces in Gaza has drawn headlines and concerns that the conflict could have a broader regional impact.  Despite these issues, oil markets remain relatively unaffected because there has not been an impact to supply or distribution.  Meanwhile, domestic refinery utilization reached its highest level of the year last week, which has helped to push gas prices lower.  After starting the week above $104 per barrel, crude oil closed at $102.09 per barrel Friday, down roughly $1 from last week.

The Energy Information Administration (EIA) noted in its weekly report that U.S. crude oil inventories dropped 4 million barrels to 371.1 million barrels, marking the fourth straight week of inventory declines (totaling a 17 million barrel drop in four weeks).  Though crude oil inventories have been slipping, strong domestic production of 8.6 million barrels per day (bpd) has kept U.S. stocks above where they normally are this time of year.  Gasoline stocks rose 3.4 million barrels to 217.9 million barrels.  Gasoline demand dropped 264,000 bpd to 8.8 million bpd, which is steady and on par with last year.

“Gas prices continue their mid-summer slide, which is welcomed news for motorists as the peak summer driving season rolls on,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “Abundant refinery production has trumped geopolitical tensions for now.  Even with crude prices continuing to trade above $100, AAA anticipates gas prices will continue to slide.”

AAA forecasted that drivers would pay relatively high prices this summer, ranging from $3.55 – $3.70 cents per gallon.  This week prices at the pump dropped below that anticipated range (the national average dropped to $3.54 per gallon Friday, the lowest price since March 29).  Barring any unforeseen interruption in refining or production, especially as we get deeper into hurricane season, AAA continues to believe prices will continue to ease for the remainder of the summer driving season.

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)