Gas prices recede
After two consecutive weeks on the rise, gas prices dropped slightly this week as production and refining capacities were restored following tropical storm activity in recent weeks. The national average for regular grade gasoline dropped 5 cents this week to $3.61 per gallon Friday. Prices remain 3 cents higher than month ago prices and 88 cents higher than year ago prices, yet they hold 50 cents below the all-time high of $4.11 per gallon set in July 2008.
Crude oil gained nearly 3 percent early this week, its fourth straight weekly gain and its longest winning streak since July, as prices inched ever-closer to the $90 per barrel mark. Action to contain Europe’s debt crisis (easing concern about falling oil demand) and weakness in the U.S dollar contributed to the commodity’s steady growth this week. U.S. economic news was mixed. New claims for U.S. jobless aid rose unexpectedly last week and factory activity along much of the Eastern seaboard contracted early this month, bolstering the case for more action to support the struggling economy. To the contrary, U.S. consumer price inflation picked up in August at a faster pace than economists were expecting and the consumer price index rose 0.4 percent in August, according to the Labor Department. PositiveU.S. economic news, coupled by potential additional government stimulus efforts, will likelyincrease demand for crude oil and ultimately gasoline. Crude oil closed the week at $87.96.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks fell 6.7 million barrels, to 346.4 million barrels, primarily due to the shut down of platforms in the Gulf of Mexico due to Tropical Storm Lee. Gasoline stocks rose 1.9 million barrels to 210.8 million barrels. Gasoline demand measured at 8.848 million barrels per day (bpd) and total petroleum demand measured at 18.654 million bpd, down 732,000 bpd and 562,000 bpd behind last year. TotalU.S. petroleum demand on a four-week basis last slipped below 19 million bpd in July (a slip that was short-lived).
“Motorists found some much-needed relief at the gas pump this week asU.S. oil and natural gas production in theGulf of Mexico was restored post-Tropical Storm Lee, sending gas prices downward for the first time in almost three weeks” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “In addition, the change over from summer blended gasoline to less-expensive autumn/winter blended gasoline began this week, which will likely bring even more relief for motorists who have been grappling with high gas prices throughout the summer months.”
The switch from summer blended gasoline to the less-expensive autumn/winter blended gasoline began this week. The transition typically results in lower prices at the pump for motorists. However, should crude oil prices continue to increase, relief at the pump from the switch to autumn/winter blends could be muted. Relief or not, some analysts believe we may be witnessing the most expensive last four months of any year for gasoline, noting that U.S. consumers are on course to spend about $540 billion on gasoline this year – about $50 billion above the previous record.