AAA: Gas prices stabilizing
The daily national average price has been the highest on record for the calendar day for more than seven straight weeks. The national average price for a gallon of regular self-serve gasoline was $3.81 per gallon Friday, which was 2 cents higher than a week ago and 5 cents below month ago prices.
Gas prices remain 40 cents above year ago prices and 30 cents below the record high ($4.11/July 2008). Skewing the national average has been an historic spike in prices in California, where the state average has increased a record 50 cents in the last week to an all-time high of $4.67 per gallon.
Crude oil prices began the week below the $90 per barrel mark due to concerns about lower global fuel demand amid slowing economic growth, however, by mid-week the commodity had reversed its recent down. Concern over the potential risk of supply disruptions in the Middle East and loading delays for crude from the North Sea provided support for upward moving crude oil prices. U.S. crude rose towards $93 a barrel Thursday (its highest levels in weeks), supported by escalating tensions between Turkey and Syria. Even though the two countries are not major producers, experts worry tensions could spread to bigger producers in the region. U.S. unemployment benefits dropped to the lowest level in four years, also supporting increased oil prices. Crude oil settled at $91.86 Friday for its first weekly gain in a month.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude oil stocks rose last week by 1.67 million barrels, against a stock gain forecast of 800,000 barrels. U.S. gasoline stockpiles fell by 534,000 barrels, against expectations they would be unchanged on the week. Demand in the world’s largest consumer continued to drop, with gasoline use over the four weeks to Oct. 5 down 3.3 percent from year-earlier levels.
“Gas prices in the Northeast have begun to stabilize, and even decline in some areas, following an unusual autumn spike in recent weeks,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “As we head into the last two months of the year, experts believe prices at the pump will continue to decline, notably due to decreased seasonal demand. That said, analysts will continue to keep a close eye on recent tensions in the Middle East and North Africa, as any violence in the crude-rich region would likely send oil prices, and in turn gasoline prices, higher.”
Although relief has been slow in coming, gas prices are expected to fall for the remainder of the year and now there is good news on the horizon for 2013 prices. The U.S. Energy Information Administration (EIA) is forecasting that the average price of gasoline nationally will be lower overall next year than it has been the past two years: $3.44 a gallon for regular unleaded, compared with an average price of $3.65 in 2012 and $3.53 in 2011. Gas price analysts said while the outlook for the rest of 2012 entails lower prices at the fuel pump, there are too many variables to know for sure whether prices will, in fact, be lower next year, specifically geopolitical tensions in the Middle East and North Africa. In the short term, lower consumer demand for gasoline in the winter and the recent transition by U.S. oil refineries to producing less expensive winter blends of gasoline should cause fuel pump prices to go down this fall and winter.