Prices at the pump continued to stabilize, even retreat in some areas of the country, this week, leading many to wonder if 2012 gas prices have peaked weeks shy of when 2011 prices peaked.
The national average price for regular grade gasoline dropped 2 cents this week to $3.88 per gallon Friday, marking the third straight day of sub-$3.90 per gallon prices, a price point not seen since March 27. Prices remain 2 cents higher than a month ago and 4 cents higher than year ago prices, and within 23 cents of the all-time record high of $4.11 per gallon set in July 2008.
So far this month, there have been twelve days where prices have fallen, a big change from last month that marked weeks of unending increases. If gas prices continue their decline, some analysts are predicting that we may see the first example of cheaper gas prices than last year, later this month.
After beginning the week strong, U.S. crude oil futures fell for the second day in a row Thursday, brought lower by weak U.S. economic data. The number of Americans claiming unemployment benefits for the first time fell only slightly last week, and other data showed factory activity in the mid-Atlantic region slowed sharply this month and home re-sales dropped for a second straight month in March. Iran’s decision to negotiate over its nuclear program was also a factor in the commodity’s decline. Lastly, expectations by analysts that the idled ConocoPhillips’ 185,000 barrels per day refinery in Trainer, Pennsylvania, would likely be sold soon to Delta Air Lines also contributed to crude oil’s price drop. Oil settled at $103.88 Friday.
In its weekly report, the Energy Information Administration showed the nation’s crude oil stocks rose for the fourth straight week by 3.9 million barrels to 369.0 million barrels, better than anticipated. Gasoline stocks dropped 3.7 million barrels to 214.0 million barrels. Demand for gasoline in the U.S. saw a relatively small pullback of 103,000 barrels per day (bpd) to 8.681 million bpd. However, the demand number stands out when compared to the same week last year when demand was 500,000 bpd higher. The four-week demand average for gasoline continues to narrow a bit to 4 percent. Gasoline demand of 8.775-million bpd represents a 94,000 bpd increase, but reflects a 288,000-bpd drop from the same week last year. The four-week moving average shows gasoline demand destruction of 2.8 percent; and the year-to-date numbers imply about 5.9 percent lower consumption. Analysts can split hairs about actual motor fuel demand, but it is clearly lower than last year,
“April has seen more days of gas price declines than any month this year, which has motorists and analysts alike wondering if a gas price break is under way,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “While several factors influencing crude oil prices remain in play, some analysts believe gas prices will continue to retreat and sometime in the next ten days or so we could be paying less at the pump than we were a year ago.”
Gas prices have dropped for two consecutive weeks, leaving many to wonder of we have seen the peak for 2012. According to Energy Department statistics, gas prices have peaked before mid-May just once in the past 20 years. In 1998, the national average hit its high for the year on Jan. 12th, at $1.09 per gallon. Since then, the peak has not been reached before May 14th. More than half of the time over the past 20 years, gasoline prices have peaked between mid-May and Labor Day. Gasoline prices tend to rise in May as demand also climbs just before the traditional start of the summer driving season, on the Memorial Day holiday weekend. While motorists continue to hope we have seen the 2012 gas price peak, history suggests that the national average will not peak before mid-May at the earliest.
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Chris Graham
