AAA: Gas prices well below 2012 averages as Labor Day approaches

AAA LogoDrivers across the country continue to enjoy discounted gas pump prices versus a year ago, which is good news for those planning to hit the road for the upcoming Labor Day holiday weekend.  The national average price for regular unleaded gasoline was $3.54 per gallon Friday.  While this is the lowest price on this calendar date in three years — in 2012 the average was $3.72 and in 2011 it was $3.57 — it trails the all-time high of $3.69 in 2008 by just 15 cents.  Today’s price is unchanged from a week ago, 12 cents less than a month ago, 18 cents less than a year ago, and has now fallen nine cents since the beginning of August.

While gas prices remain seasonally below recent years, crude oil continues to trade at a significant premium in the $103 to $108 per barrel range.  Positive economic data combined with geopolitical tension in the Middle East have boosted oil.  Manufacturing activity in the U.S. and China is at multi-month highs, the national U.S. unemployment level fell to a four and a half year low of 7.4 percent last month, while business activity in the Eurozone rose more than expected.  These factors suggest the global economy is on the mend and signal hope for higher fuel demand.  Investors are also watching the market for any impact of any tapering of the U.S. Reserve’s economic stimulus plan, which could start as early as next month.

Traders continued to keep close watch on Egypt and Libya.  Violence in Egypt, Libya and Syria continues to impact oil prices.  Egypt is not a major oil producer; however it does have control over both the Suez Canal and Sumed Pipeline, which are key points of transit for the global crude oil supply in the Middle East. Escalating violence in these countries continues to raise concerns that unrest could spread to other areas in the Middle East and North Africa and has subsequently sustained seasonally-high crude oil prices.  Crude oil closed at $106.42 Friday, down just over $1.00 for the week.

In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks saw a drop of 1.4 million barrels to 359.1 million barrels, in line with analyst expectations.  Gasoline stocks dropped 4 million barrels to 218.4 million barrels dropping to the lowest levels in about three months and exceeding analyst expectations.  Despite the drop in inventories, gasoline supplies are still considered comfortable.  Gasoline demand remained strong, topping 9.0 million barrels per day (bpd) for the fourth straight week (the first time this has happened since May 2011), at 9.2 million bpd.

“The end of the summer is approaching and with it comes lower gas prices – welcome news for the 29 million Americans expected to hit the road for the upcoming Labor Day holiday weekend,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “AAA travel experts don’t believe pump prices are a major factor for consumers in determining whether they will travel for Labor Day. However, fuel prices falling throughout August is certainly good news for all motorists.”

AAA Travel projects 34.1 million Americans will journey 50 miles or more from home during the upcoming Labor Day holiday, a 4.2 percent increase from the 32.7 million people who traveled last year.  Eighty-five percent of travelers (29.2 million) are expected to travel by automobile, an increase of 4.3 percent from 28 million last year.  The anticipated increase in holiday travel is predominantly due to a stronger economy, shown by increased consumer spending and the improving housing market.  The total number of 2013 Labor Day holiday travelers is expected to reach a new post-recession high.

         
 

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