Gas prices continued their downward trend, with motorists in every state enjoying year-over-year price relief at the pump, including declines of more than 40 cents per gallon in some states. The national gas price average dropped to $3.56 Friday. This price is seven cents below the week-ago price, 15 cents below the month-ago price and 35 cents less expensive than the year-ago price. Today’s 35-cent year-over-year decline is the largest such mark since October 2009. The national average has now fallen for nine straight days and 38 of 44 days since the peak 2013 price to date of $3.79 on Feb. 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.
Retail gas prices across the country surged to begin 2013, as the national average increased 49 cents through the end of February. This was the largest increase on record for the first two months of a year. The run up was only somewhat attributed to higher crude oil prices and was instead driven by a decline in refinery production and higher gasoline futures prices. Similarly, the recent decline following the dramatic rise has not been a product of lower crude oil prices, which have actually increased during this stretch. Falling retail gas prices have instead been the result of an increase in refinery production and economic concerns.
Although crude oil saw slight ups and downs this week, its general downward movement this year has been one of many factors leading to recent declines at the gas pump. In addition to lower crude oil prices, refinery maintenance completion, increased production and lower demand have all contributed to falling gas prices. Crude oil moved lower upon news that three top forecasters – the International Energy Agency (IEA), the U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC) – all revised their demand growth forecasts for the year this week. A slow-to-recover U.S. economy and economic concerns throughout Europe have eroded demand for fuel. The commodity closed at $91.29 Friday, down 1.5 percent for the week.
In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks rose 250,000 barrels to 388.9 million barrels. Crude oil inventories, though, are closing in on 389 million barrels. The total amount of crude oil on hand is more than 40 million barrels ahead of the five-year average. Gasoline stocks rose by 1.7 million barrels to 222.4 million barrels. Gasoline demand did not see a large week-to-week drop, but at 8.477 million barrels, the numbers for this time of year do not inspire much confidence for gasoline. It has been 10 years since gasoline demand has been this low in early April as typically, demand figures are near and north of nine million barrels. Even during the recessionary years in 2009-2010, early-April demand was still topping nine million barrels. The four-week demand average is closing in on a 2.5 percent contraction.
“Falling prices are a result of a combination of things: lower crude prices, refineries are finishing up their spring maintenance earlier this year and the fact that motorists are driving fewer miles,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Motorists might – just might – have seen the highest prices of the year come and go. Barring unforeseen circumstances, AAA predicts the average price of gas in 2013 will be lower than 2012’s average of $3.60 a gallon, which is the highest annual average ever recorded by AAA.”
In its “Short-Term Energy and Summer Fuels Outlook,” the EIA reports that during the April-through-September summer driving season this year, the agency forecasts regular gasoline retail prices to average $3.63 per gallon. This would be the lowest in three years, down six cents from $3.69 a gallon a year ago and off eight cents from the $3.71 average in 2011. The projected monthly average regular retail gasoline price falls from $3.69 per gallon in May to $3.57 per gallon in September. EIA expects regular gasoline retail prices to average $3.56 per gallon in 2013 and $3.39 per gallon in 2014, compared with $3.63 per gallon in 2012. Factors contributing to the projected decline in gas price include lower crude oil prices, increased domestic crude production, fewer vehicle miles traveled and increased fuel economy in U.S. vehicles.
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