Gas prices continued to slide for the third straight week, dropping 14 cents since their $3.94 peak (on April 4) and falling 18 cents below year-ago prices.
The national average price for regular grade gasoline dropped 3 cents this week to $3.80 per gallon Friday. Prices are 13 cents lower than a month ago, yet remain within 31 cents of the all-time record high of $4.11 per gallon set in July 2008. One year ago this week, gas prices topped out at $3.99 per gallon on May 5, which would be the 2011 high price.
Crude oil began the week strong, settling north of $106 per barrel Tuesday for the first time since the end of March. However, more signs of slowing U.S. economic growth, swelling U.S. crude inventories and a strengthening U.S. dollar caused the commodity to drop 2.6 percent Thursday (a second straight day of declines) to $102.54 per barrel, the biggest one-day loss since December 14. Oil markets have been balancing supply concerns stemming from a string of disruptions across the globe and the potential loss of Iranian crude due to Western sanctions against fuel demand, which has been hit by the struggling economy and high prices. Friday, a disappointing jobs’ report combined with the epiphany that there were few elements likely to promote a resurgence in crude oil values until summer, sent the commodity down $4.05 (nearly 4 percent) for the day and well below the $106 per barrel seen early in the week to settle at $98.49. The last time crude settled at less than $100 per barrel was on February 10 when it closed at $98.67.
In its weekly report, the Energy Information Administration (EIA) showed the nation’s crude oil stocks rose for the sixth straight week by 2.8 million barrels to 375.9 million barrels, in line with expectations. Gasoline stocks fell 2.0 million barrels to 209.7 million barrels, 5.2 million barrels above last year but pale in comparison to the 224.9-million-barrel inventory of 2010. Gasoline demand increased modestly, up 197,000 barrels per day (bpd) on the week to 8.692 million bpd, but weekly numbers are now colored by extensive monthly revisions. EIA published a final accounting of February 2012 demand that saw a dip of just 0.3 percent from 2011, and there is a sense that weekly numbers will overstate demand destruction until we reach midsummer, when new methodology was incorporated last year.
“Recent declines in prices at the pump have motorists wondering if the price hikes of the last few months are over; industry experts caution the coast is not clear just yet,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Crude oil prices, and in turn gas prices, could move higher as the summer driving season kicks into high gear, with multiple national and international factors at play, however many believe that at this point gas prices will not move much higher than the 2011 high of $3.99.”
East Coast motorists continue to watch the latest refinery developments in the hopes that gas prices will continue to decline into the summer months. Despite this week’s announcement that Energy Transfer Partners (ETP) will purchase Sunoco, not much has changed the uncertain future of the Sunoco refinery in South Philadelphia (a major East Coast refinery). New owners EPT still plan to sell the refinery as previously announced, which will be idled in August if a buyer is not found. If the refinery is idled, it could send gas prices back on the upswing, taking a bigger bite out of motorists’ wallets this summer. Also making refinery news in the coming months will be the sale of the ConocoPhillips Trainer, PA, refinery to Delta Airlines. The airline’s wholly-owned subsidiary Monroe Energy LLC announced it will acquire the refinery to process jet fuel for its fleet, as well as gasoline and other products – good news for motorists and (potentially) air passengers.
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