While there are some signs of relief for motorists, as gas prices have fallen for 19 of 21 days (nationally), price relief has not spread evenly across the country, where the exception has been in the Northeast and West Coast where extremely tight supplies have seen prices move dramatically higher.
The national average price for a gallon of regular self-serve gasoline was $3.79 per gallon Friday, which was 1 cent higher than a week ago and 3 cents below month ago prices. However, gas prices remain 39 cents above year ago prices and 32 cents below the record high ($4.11/July 2008).
Crude oil prices saw ups and downs this week, slipping below the $90 per barrel mark on Wednesday to $88.14 (down more than 4 percent for the day and its lowest close since August 3) on demand concerns and slowing economies. In particular, China has shown that its economic turnaround continues to slow and the euro zone continued to head into an almost certain recession. However, the commodity rebounded 2 percent (back above $90 per barrel) Thursday as escalating tensions between Syria and Turkey raised concerns over the security of oil supplies in the Middle East. By Friday, crude oil prices fell again as a fragile global economy offset support from a better-than-expected U. S. unemployment report (adding 114,000 nonfarm payroll jobs, above expectations for 96,000 jobs). The U.S. unemployment rate unexpectedly fell to 7.8 percent in September, its lowest level since January 2009 and against economist expectations it would rise. The U.S. Labor Department report showed nonfarm payrolls rose by 114,000 last month, just above expectations and up from 96,000 added in August. Some analysts and brokers expressed skepticism about the data, which could help President Barack Obama’s reelection bid. Crude oil closed the week at $89.88, down 2.5 percent on the week.
In its weekly energy report, the Energy Information Administration (EIA) data showed crude oil stockpiles fell 500,000 barrels to 364.7 million barrels, in contrast to expectations of a 1.5 million barrel build. However, crude stocks remain above average for this time of year. Gasoline stocks inched up 100,000 barrels to 195.9 million barrels, against expectations of a 500,000 barrel build. Gasoline demand as measured by the EIA was down 137,000 barrels to 8.63 million barrels per day (bpd) last week, off by 366,000 bpd from last year. The four-week average is 2.5 percent behind the 2011 level. Motor fuel demand plunged last November, and with prices considerably higher this year, there are concerns that the slide may be moved up on the calendar.
“While gas price relief has made its way to the country’s midsection, motorists in the Northeast have seen prices trend higher in the past week or so,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Supplies have been tight along the coasts; however, relief is in sight. Experts believe prices in the Northeast will begin to ease in the coming week, with the greatest relief coming as we head into late-October and November.”
Lower crude prices combined with high wholesale gasoline prices give refineries supplying Northeast and West Coast markets incentive to get back to full production capacity after planned and unplanned maintenance, but pump prices in these regions are likely to be slower to decline until stocks recover to more adequate levels. That said, experts believe gas prices on the East Coast will gradually ease in the coming days and weeks as more imported oil has begun to arrive in the region to ease the situation. Tom Kloza, chief oil analyst for the Oil Price Information Service (OPIS) and AAA gas price partner expects broad portion of the country to see prices at $3.50 or lower by Thanksgiving. But the West Coast will be closer to $4.
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