As the summer driving season gets underway, most Americans are enjoying lower gas prices then they might have expected earlier this spring. But prices, while significantly lower than their 2012 peak in early April, are still higher than they have been at the start of most summers.
The national average price for regular grade gasoline dropped to $3.61 Friday – down 6 cents for the week, 19 cents for the month and 17 cents below year-ago prices – the third highest post-Memorial Day weekend prices on record, only behind 2011 and 2008. Gas prices remain 50 cents below the all-time record high of $4.11 set in July 2008.
U.S. crude oil continued its downward trend into the shortened Memorial Day week, as rising crude oil inventories, disappointing economic data, easing tensions over Iran’s nuclear program and a deepening euro zone debt crisis pressured oil prices. By mid-week, the commodity fell below the $90 per barrel mark for the first time since October 2011. Losses continued right up to Friday’s close, as crude oil shaved off $3.30 to settle at $83.23. Since the first day of May, crude oil dropped $22.50 or more than 21 percent, the biggest percentage monthly loss since December 2008 and snapping a string of three straight monthly gains.
In its weekly report, the Energy Information Administration reported the nation’s crude oil stocks saw a 2.2 million barrel build to 384.7 million barrels, just under 385 million barrels, a level not seen since the summer of 1990. Gasoline stocks dropped 800,000 barrels to 200.2 million barrels, lower than stocks have been the last two years. Gasoline demand saw a pre-Memorial Day holiday weekend move higher last week to 8.931 million barrels per day (bpd), up by 299,000 bpd. The running four-week average is still behind last year at minus 2.6 percent. Total petroleum product demand, however, was down 363,000 barrels to 18.32 million bpd.
“The summer driving season is officially here and gas prices continue to trend downward since their early April peak, which is welcome news for motorists wanting to hit the roads this summer,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “For the second straight year, gas prices have dropped ahead of the Memorial Day weekend, rather than the first holiday weekend of the summer season boasting the highest gas prices of the season. Analysts believe prices will continue to drop, perhaps to as low as $3.00 to $3.25 per gallon in some parts of the country this summer.”
While prices at the pumps are expected to continue their downward trend and perhaps level off at some point this summer, analysts remind motorists that come Election Day prices will likely be even lower. Prices always move lower from Labor Day to Election Day and the trend has absolutely nothing to do with politics and everything to do with the fact that the “ingredients” (i.e. crude oil) that go into making gasoline are cheaper at that time of year. This is another bright spot for motorists to look forward to beyond the typical summer driving season.
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Chris Graham
