Prices at the pump continue to retreat from an atypical September rally of daily gas price records, where prices peaked at $3.87 per gallon nationally.
Despite these record highs, prices have begun to decrease following the end to the summer driving season, the resolution of regional supply and distribution issues, and the end of summer-blend gasoline specifications for much of the country on September 15.
The national average price for a gallon of regular self-serve gasoline fell to $3.79 per gallon Friday, 4 cents lower than one week ago and a penny below month ago prices. However, gas prices are 32 cents above year ago prices.
Crude oil fluctuated within the $90 to $93 per barrel range for most of the week, even settling just below $90 ($89.98) a barrel mid-week for the first time since August 2. However, prices rebounded Thursday as fears over Iran resurfaced. The dispute between the West and Iran over Tehran’s nuclear program could lead to supply disruptions in the Middle East and North Africa, therefore increasing crude oil prices. Europe’s debt problems also impacted crude oil prices as Spain’s economy continues to slow and anti-austerity protestors and police clashed in Athens and Madrid. Domestically, the U.S. Federal Reserve initiated a third round of measures to revive growth in the world’s biggest economy. Crude oil closed the week at $92.19. The commodity posted a nearly 6 percent gain for the third quarter, after a 17.5-percent second quarter dive.
In its weekly energy report, the Energy Information Administration (EIA) data showed crude oil stockpiles fell 2.4 million barrels to 365.2 million barrels, in contrast to expectations of a small build. Gasoline stocks fell by 481,000 barrels to 195.8 million barrels. Gasoline demand as measured by the EIA increased 138,000 barrels to 8.77 million barrels per day (bpd) last week.
“Gasoline prices at the pump have been making a slow descent from their summer peak as prices for crude oil drop, but drivers may still have to wait a few weeks for lower prices to really catch on,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “AAA expects gas prices to continue to decline as we move further into the fall and approach the end of the year.”
Historically, gas prices tend to fall from September through Christmas. AAA expects this trend, which has held true for seven of the previous nine years, to continue in 2012 and predicts that the national average price will continue to fall as we approach the end of the year. However, experts warn that due to unusually high wholesale gasoline prices, some markets will see brief gas price spikes over the next ten days or so before retreating, including the northeast where supply is extraordinarily tight right now. Tom Kloza, chief oil analyst for the Oil Price Information Service and AAA gas price partner believes gasoline prices are almost certain to drop significantly in November, the month when the biggest drops typically occur due to refineries switching to a cheaper made winter-blend fuel.
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Chris Graham
