The official start of summer was marked by rising temperatures and falling gas prices. Prices at the pump continued to follow crude oil’s downward trend. On Tuesday, the national average price for regular grade gasoline fell below $3.50 per gallon for the first time since February 10. The national average dropped to $3.45 Friday, down 7 cents for the week, 23 cents for the month and 18 cents below year-ago prices.
The average gas price in the U.S. has dropped 49 cents since peaking at $3.94 in early April and continues to ease away from the record high of $4.11 set three summers ago.
Here is a snapshot of how far gas prices have fallen throughout the mid-Atlantic region since peaking in early April:
- – In Virginia the cost of a gallon of gasoline has fallen 69 cents.
- – In Washington, D.C., proper, it has dropped 64 cents since ascending to a lofty $4.19 per gallon.
- – In the DC Metro area, it has also dropped 64 cents a gallon, falling from a high of $4.05.
- – In Maryland, it has receded 63 cents a gallon.
- – In Delaware, the drop is 61 cents.
- – In Pennsylvania, the big dip is 58 cents.
- – In New Jersey, it is 46 cents, the smallest in our region, but then again, Jersey prices were still the lowest in our region at their peak.
Crude oil prices continued to trade in the low- to mid-$80 range for most of the week, before sliding into the $70-range on Thursday to close at $78.20 – a fresh 8-month low. It marks more than a $5.75 drop since last Friday (6/15) or a 7 percent decrease in four trading sessions. It also leaves the market wondering where the bottom will be. Some analysts believe the commodity could be on the verge of settling in the $70 to $76 range in the coming weeks. Several factors supported lower crude oil prices this week, including poor economic data on U.S. home sales, Chinese manufacturing, jobless claims and Middle Atlantic manufacturing (all indicators of weaker global oil demand). In addition, the U.S. dollar climbed 0.5 percent and Europe’s economy remains stable only on an hour-to-hour basis. Combined with disappointment that there was no hint of further quantitative easing this week by the Federal Reserve caused commodities (including crude oil) to drop. Crude oil closed the week at $79.76 Friday, down over 27 percent from its 2012 high of $109.77 on February 24.
In its weekly report, the Energy Information Administration (EIA) reported the nation’s crude oil stocks rose 2.86 million barrels to 387.3 million barrels. Gasoline stocks rose by 943,000 barrels to 202.7 million barrels. Total petroleum demand for the week fell by 807,000 barrels per day (bpd). When measured over four weeks, total petroleum demand is 18.6 million bpd versus a figure just above 19 million bpd in the same week of 2011. Gasoline demand dropped 437,000 bpd to just 8.693 million bpd, likely indicating we may not see a single month touch 9 million bpd in 2012.
“Summer officially began this week and with the season’s rising temperatures came falling gas prices, a bright spot for motorists looking to fill up for summer travel and recreation,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Industry analysts believe prices at the pump will fall another 5 to 20 cents before the Independence Day holiday – which is good news for the 35.5 million Americans AAA projects plan to travel by car for the second holiday of summer. As crude oil continues to trend lower, gas prices will follow suit for the foreseeable future.”
AAA projects that of the 42.3 million Americans expected to travel 50 miles or more from home during the Independence Day holiday weekend, approximately 35.5 million people plan to travel by automobile setting the high-water mark for the decade, as 84 percent of all Independence Day holiday travelers choose this traditionally dominant mode of transportation. This is a four percent increase over the 34.1 million people who traveled by auto last year. The price of gasoline is another factor expected to play a role in spurring intentions to travel this Independence Day holiday period. On April 6, motorists experienced a year-to-date peak average price of $3.94 per gallon for regular gasoline. The current national average price of regular gasoline is $3.42 per gallon, 52 cents lower than the April peak and 15 cents less than this time last year.
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