Since national gas prices peaked at the end of February, motorists nationwide have felt welcome relief at the pump in the form of falling gas prices. However rising crude oil prices in recent weeks have impacted gas prices across most of the country and now motorists in most states are paying more today than one week ago.
The national average price for a gallon of regular unleaded gasoline was $3.56Friday. This price is four cents more expensive than one week ago, a penny less than one month ago, but it remains 18 cents less than one year ago. After registering a week-over-week decline every day since March 1 (61 consecutive days), the national average has posted a week-over-week increase for ten straight days (through Friday). The national average is currently 23 cents below the peak 2013 price to date of $3.79 on February 27. In 2011 the national average for regular unleaded gasoline peaked at $3.98 on May 5. In 2012 the price peaked at $3.94 on April 5 and 6.
Crude oil continued to hover near or around the $95 per barrel mark for most of the week. The commodity hit a one-month high on Wednesday settling at $96.62 per barrel (its highest level since April 2) influenced primarily by a weaker U.S. dollar. Later in the week crude oil retreated slightly due to better than expected U.S. economic data, with jobless claims falling to their lowest level since early 2008, as well as ample supplies in the U.S. oil market. However investors continue to have doubts about China (the world’s no. 2 economy), where inflation rose, yet factory prices fell for the fourteenth straight month and GDP grew less than expected, and how these figures will influence demand. Crude oil could also be influenced by increased tension in the Middle East. An Israeli airstrike in Syria last weekend raised fresh concerns of a possible disruption to oil supplies in the Middle East and added to the upward pressure on prices. In the spring of both 2011 and 2012 oil prices rose substantially on violence and escalating geopolitical tensions with Libya and Iran respectively, before tumbling as these concerns were alleviated heading into the summer. Crude oil closed at $96.04 Friday.
In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks rose 230,000 barrels to 395.5 million barrels, but remain at historical record numbers (not seen since 1981). Gasoline stocks fell by 910,000 barrels to 215.1 million barrels. Two consistent themes continue to echo through EIA data this spring. Most notably, the U.S. is on the threshold of achieving crude oil output figures not seen since the 1980s. This week’s production number of 7.369 million barrels per day (bpd) (up 57,000 bpd) represents the highest domestic production level since Feb. 7, 1992 and output will flirt with numbers from the 1980s by late summer. The second theme is equally notable, but perhaps less predictable. Gasoline demand continues to lag badly behind previous years. Despite the fact that weekly gasoline demand rose 30,000 bpd (to 8.445 million bpd) last week, May began with a four-week average gasoline demand number of just 8.498 million bpd. As recently as 2010, May began with a demand figure of 9.216 million bpd. Consumption is at the most sluggish rate calculated for mid-spring since 1999.
“Despite slight increases this week, prices at the pump have declined throughout most of the spring, which has brought welcome relief to motorists,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Looking ahead, analysts believe summer gas prices will be lower in the U.S. than they were last year, but not much lower due to U.S. refineries exporting record amounts of fuel overseas. AAA continues to believe that barring any unforeseen circumstances, gas prices should drop to $3.20 to $3.40 per gallon by mid-summer.”
In its monthly Short Term Energy Outlook (STEO), the EIA also release its Summer Fuels Outlook. The report noted falling crude oil prices contributed to a decline in the U.S. regular gasoline retail price from a year-to-date high of $3.78 per gallon on February 25 to $3.52 per gallon on April 29. The EIA expects the regular gasoline price will average $3.53 per gallon over the summer (April through September), down $0.10 per gallon from last month’s STEO. The annual average regular gasoline retail price is projected to decline from $3.63 per gallon in 2012 to $3.50 per gallon in 2013 and to $3.39 per gallon in 2014. Energy price forecasts are highly uncertain, and the current values of futures and options contracts suggest that prices could differ significantly from the projected levels.
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