Motorists have seen gas prices drop steadily for the past several weeks, bringing much needed relief at the pump as the summer driving season gets underway.
The national average price for regular grade gasoline dropped to $3.56 Friday – down 5 cents for the week, 19 cents for the month and 19 cents below year-ago prices. Prices have dropped 38 cents nationally since their early-April peak and are currently 55 cents below the all-time record high of $4.11 set during the summer of 2008.
U.S. crude oil started the week just above $81 per barrel ahead of Monday’s opening bell, but the commodity would not drop below the $80 per barrel mark (as some analysts expected), instead closed higher for the first three days of the week. European efforts to rescue troubled Spanish banks sent the euro higher, weakened the dollar and boosted oil prices. Crude oil prices also received support when a U.S. Fed official hinted at more monetary easing to support the economy. Tensions between Iran and nuclear regulators also put upward pressure on crude. However, it was Thursday’s disappointing comments by Federal Reserve Chairman Ben Bernanke that reversed earlier gains. Bernanke gave few hints that further stimulus was imminent, despite a surprise Chinese rate cut which suggests its economy was performing even worse than expected. By Friday’s close crude oil settled down 72 cents per barrel for the day, but up 87 cents per barrel on the week, avoiding a sixth consecutive weekly loss. Despite this week’s slight gain, oil prices have been unable to sustain any solid upward momentum over the last several weeks as European recession fears and concerns about a reduction in global demand continue to grip markets. Over the last month, crude oil has dropped nearly 17 percent.
In its weekly report, the Energy Information Administration reported the nation’s crude oil stocks fell 111,000 barrels to a still-hefty 384.6 million barrels, snapping a 10-week string of builds but falling less than expected. Gasoline stocks rose 3.3 million barrels to 203.5 million barrels, topping expectations. The higher stocks were helped by gasoline demand that tipped some 283,000 barrels per day (bpd) lower to a disappointing 8.648 million bpd, off 514,000 bpd from the same week last year. The year-on-year comparison is skewed by a later Memorial Day holiday one week ago, but the broader four-week average shows gas demand still 4percent off 2011 levels. Gas demand tends to be lackluster in the three weeks that follow the Memorial Day fill-up.
“The pain at the pump that had motorists fearing record-setting gas prices this summer has subsided in recent weeks, with the national average price of regular grade gasoline dropping nearly 40-cents per gallon since its early-April peak,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Analysts believe motorists’ wallets could be pinched event less by the July 4th holiday, when some say prices could drop to $3.50 per gallon or even lower.”
Analysts continue to believe motorists can look for a break in gas prices this summer. Crude oil, the primary factor in determining gasoline prices, has dropped nearly 17 percent in the last month, easing pain at the pumps. Gas prices could fall to $3.50 per gallon by July 4th and perhaps into the $3.00 to $3.25 per gallon range later this summer.
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