Prices at the pump continued to rise for the second straight week, impacted by hurricanes and economic factors. The national average for regular grade gasoline held steady for most of the week at $3.66 per gallon, up a penny in the last week and up 4 cents in the last month. Prices remain 98 cents higher than year-ago prices and 45 cents below the all-time high of $4.11 per gallon set three summers ago in July 2008.
Crude oil briefly breached the $90 per barrel mark mid-week for the first time in a few weeks, reaching a 5-week high. However, trading was unable to sustain the benchmark and the commodity dropped back below $90 per barrel for the remainder of the week. Oil retreated further Friday (nearly 2 percent), following gloomy economic prospects, weak U.S. supply and strength in the U.S. dollar following a drop in the euro to a six-month low (oil, priced in dollars, falls as the U.S. dollar strengthens as it becomes less affordable for holders of foreign currencies). On Thursday President Barack Obama proposed $447 billion package of tax cuts and spending plans aimed at boosting growth and job creation, however, the announced plan failed to restore confidence to jittery markets. Crude oil closed the shortened trading week at $87.24.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks fell 4 million barrels, to 353.1 million barrels. Gasoline stocks fell 200,000 barrels to 208.8 million barrels. Gasoline demand fell to 8.956 million barrels per day (bpd) last week and the four-week demand number of 9.097 million bpd compares with 9.371 million bpd a year ago, a drop of just under 3 percent. The EIA also revised its short-term energy outlook, noting gas prices should fall to about $3.47 per gallon in the fourth quarter of 2011, mainly due to the switch from summer to autumn/winter blended gasoline. Over all the EIA expects an average of $3.56 per gallon for the year and $3.54 per gallon for 2012.
“Motorists looking for relief at the gas pump will have to wait out the continued effects of Hurricane Irene and Tropical Storm Lee, both of which shut down U.S. oil and natural gas production,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Despite somewhat lower crude oil prices, such storms have kept upward pressure on gas prices. Although good news for motorists should come in the weeks ahead as the change over from summer blended gasoline to the less-expensive winter blended gasoline begins, which typically translates to lower prices at the pump.”
According to experts at weather forecasting firm Weather Underground, a typical hurricane season has 10 or 11 named storms. Halfway through the 2011 season (which extends through November), Katia marked this year’s eleventh such storm and last week Nate became the fourteenth named storm. At the current rate of storm development, we are on pace to have 25 named storms this year. This would mark the busiest season since 2005, which was the most active in recorded history and included Hurricanes Katrina, Rita, and Wilma.
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