AAA: Gas prices could continue downward movement through year’s end

Prices at the pump have retreated in recent days, due in part to reduced crude oil prices and the switch to less expensive winter-blended gasoline.  The national average price for regular unleaded gasoline dropped to $3.49 per gallon Friday, down five cents from a week ago, down four cents from month ago prices and 36 cents less than a year ago.  Yet, despite the relative year-over-year price relief, this week (Tuesday) marked the 1,000^th consecutive day with the national average price at the pump above $3.00 per gallon, which is the longest such stretch on record. The current streak began on Dec. 23, 2010.  AAA forecasts the national average will remain above $3.00 per gallon for at least another thousand days barring a major economic recession.

While retail gas prices have drifted lower in much of the U.S., West Texas Intermediate (WTI) crude oil prices have continued to trade above $100 per barrel on geopolitical tensions in the Middle East and North Africa.  Prices had pulled back somewhat from the recent multi-year high of $110.10 on August 28 but remained elevated as the U.S. publically considered action regarding Syria.  This week prices surged after the U.S. Federal Reserve decided to continue with its $85-billion-a-month bond-buying program to support U.S. economic growth, contrary to market expectations that it would announce a scaling down.  Yet, the resumption of production in Libyan oil fields and the easing of tensions after Syria agreed to a plan to put its chemical weapons arsenal under international control helped ease the prices.  Crude oil settled at $104.75 at Friday’s close, down more than three percent on the week.

In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks dropped 4.4 million barrels to 355.6 million barrels, a much bigger draw than expected.  Gasoline stocks saw a 1.6 million barrel build to 216 million barrels.  Gasoline demand was brisk, pushing up 423,000 barrels per day (bpd) to just over 9 million bpd, swinging back above the 9 million bpd mark after dropping below that last week.

“Relief at the pump continues for motorists as gas prices continue a downward trend that began several weeks ago,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “Yet despite this downward movement, prices at the pump marked a significant milestone this week when prices remained over the $3.00 mark for 1,000 consecutive days (as of Tuesday, 9/17).  Paying less than $3.00 per gallon for gasoline may very well be a thing of the past for most Americans.  The reality is that expensive gas is here to stay into the future.”

The summer driving season has passed and motorists are back into their regular driving routines – driving to work and school.  This time of year gas prices typically fall due to the switch to less-expensive winter-blended gasoline, as well as decreased demand.  That said, all indications point to lower gasoline prices for the remainder of the year.  However, hurricane season remains an unknown factor.  The first half of the season has been uneventful to say the least, however, no one should assume the rest of the season will end with a whimper.  Meteorologists will continue to watch for late season storms to form in the Atlantic and track any likelihood of such storms impacting the U.S. East Coast.  Any disruption to oil refining, production or distribution due to a hurricane would certainly impact gas prices in the short term.

 

CURRENT AND PAST GAS PRICE AVERAGES

Regular Unleaded Gasoline (*indicates record high)

 

AAA is the most comprehensive resource for gas prices.  Unlike the Lundberg Survey of 7,000 gas stations, AAA reports reflect actual prices from credit card transactions at more than 100,000 gas stations in the U.S.