AAA: Gas prices fall as fall arrives

AAA LogoGas prices, like autumn leaves, have been falling for the past few weeks.  The downward trend is welcome news to motorists who have settled into their post-summer driving routines.  Friday’s national average price for regular unleaded gasoline dropped to $3.37 per gallon, down five cents from a week ago, down 22 cents from month ago prices and 41 cents less than a year ago.  Gas prices averaged $3.52 per gallon in September, the lowest national monthly average for the month since 2010.  Prices at the pump decreased 19 cents per gallon (5.4 percent) in September, which was the largest monthly decline since October 2012.  The national average has declined for 33 days in a row (through Friday), which is the longest consecutive decline since April 2012.

For more than sixty sessions, dating back to July 3rd, West Texas crude has stayed over $100 per barrel.  Prices this week have trended lower but so far have evaded dipping below key support levels that have the potential to send values into the $90 per barrel range.  After dipping below $103 per barrel last Friday, prices this week have closed on both sides of the $102 per barrel mark.  News that President Obama had spoken by phone to Iranian President Hassan Rouhani – the first direct talks between the US and Iran in more than 30 years – added an unanticipated calming effect on markets as analysts try to determine whether this action will help to alleviate geo-political tensions in the Middle East.  Also, Italy’s government has been thrown into turmoil as Silvio Berlusconi withdrew his support from the current coalition government of Prime Minister Enrico Letta.  The actions of Berlusconi, have added to economic uncertainty in the European Union, which could result in additional volatility in petroleum markets.  The first day of the shutdown, Tues, 10/1, crude oil dropped to $102.04 which was the lowest settlement since July 3.  Crude oil settled at $103.84 Friday, up nearly one percent on the week.

In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks grew by 5.5 million barrels to 363.7 million barrels, which is not unusual given decreasing refinery runs and seasonal maintenance work on the horizon.  Gasoline stocks grew by 3.5 million barrels to 219.7 million barrels, which is well above last year’s sub-200-million-barrel mark at the end of September.  Implied demand for gasoline did see a big decline, dropping 319,000 barrels per day (bpd) to just 8.527 million bpd, about a 100,000 bpd shy of the same week in 2012 and the lowest level since May of this year.

“Most drivers are paying the lowest gas prices in more than eight months due to abundant gasoline supplies, the end of the summer driving season, lower oil costs and the switchover to winter-blend gasoline,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Supply and demand is working in most consumers’ favor with consumption down and gasoline stocks more than 10 percent higher than a year ago.  Looking ahead, gas prices could drop another 25-30 cents per gallon to the cheapest averages of the year barring significant refinery problems or higher oil costs.”

Barring a hurricane or other unexpected disruption to gasoline production and distribution, AAA expects that retail prices will continue to lower in the coming months. Sufficient supplies, flat demand and cheaper winter-blend gasoline mean motorists are likely to pay less to fill their tank.  That said, experts continue to monitor Tropical Storm Karen as it moves across the southeastern U.S. and pounds the region with heavy rains and wind.  The national average dropped 56 cents per gallon a year ago between October 1 and December 20 to a low of $3.22 per gallon. The national average declined three out of the previous five years between the beginning of October and the end of the year.  The national average declined 26 cents per gallon last October and 13 cents per gallon in October 2011.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

10/6/13

Week Ago

Year Ago

National

$3.35

$3.41

$3.81

Virginia

$3.14

$3.17

$3.60

Charlottesville

$3.06

$3.12

$3.56

Norfolk Area

$3.15

$3.18

$3.54

Richmond

$3.09

$3.10

$3.55

Roanoke

$3.07

$3.14

$3.57

Crude Oil

$103.84 per barrel (at Friday’s close)

$102.87 per barrel (9/27/13)

$91.71

per barrel

(10/4/12)

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