The national average price of gasoline decreased during March for the first time in 10 years, and gas prices now average more than 30 cents per gallon less than a year ago. The national gas price average dropped a penny this week to $3.63 Friday. This price is 10 cents below the month-ago price and 31 cents less expensive than the year-ago price. This spring, the national average should remain less expensive than last year’s prices. Last year, gasoline prices peaked in April, so this year’s decrease throughout March is unusual.
This week marks the one-year anniversary of the 2012 peak in gas prices, when the national average reached $3.94 per gallon on April 5 and 6. Gas prices peaked in 2011 at $3.98 per gallon on May 5. Gas prices spiked in late January through February primarily because of supply concerns with refineries in February, which processed the lowest amount of crude oil in nearly two years due to extensive maintenance and facility upgrades.
While retail gas prices declined steadily in March, oil prices creeped higher on signs of continued economic recovery. West Texas Intermediate (WTI) began the month with what was at the time its lowest settlement of the year ($90.68 per barrel) before rising to end March at its highest price since February 14 ($97.23). However, after starting April over $97 per barrel, crude oil has seen losses this week to below the $93 per barrel mark. Crude oil is poised for its biggest weekly fall since September. Bleak U.S. economic data – weaker-than-expected manufacturing growth, lower-than-expected private sector hiring and higher jobless claims – and surplus crude inventories indicated a grim outlook for demand. Crude oil closed the week at $92.70 Friday, down nearly five percent for the week.
In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks rose, as expected, climbing 2.7 million barrels to 388.6 million barrels. Gasoline stocks fell by 572,000 barrels to 220.7 million barrels. Gasoline demand last week, as measured by EIA, actually rose by 124,000 b/d to 8.523 million bpd, but that reflects a poor level for a week bracketing the peak Easter spring break period. There is a hint that demand is particularly poor across the upper tier of U.S. states in the Midwest and Northeast. The four-week average for gasoline is now 104,000 b/d behind last year, after a relatively robust February. American consumers may be beneficiaries of motor fuel costs that are 30cts/gal below year ago, but EIA stats have yet to demonstrate that there is any measurable lift from cheaper prices.
“It is very unusual for gas prices to decline in early spring like we have seen this year,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “An increase in refinery production and lower oil prices in early March have combined to provide rare falling prices for motorists in comparison to recent years. While it is possible that gas prices may surge briefly again this spring, the national average should remain less than last year’s high of $3.94 per gallon due to increased domestic production and continued low demand.”
AAA predicts gasoline prices nationwide in April should remain less expensive than in recent years because oil is cheaper and refinery production is rising. The price of crude oil is about $6 per barrel less than a year ago, while refinery utilization has increased by about five percent since early March, according to the federal Energy Information Administration. Much of the country must transition to more expensive summer-blend gasoline and there is still refinery maintenance left to complete, which could result in a brief surge in gas prices.
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