Gas prices continued their downward trend for the fourth consecutive week, which has been welcome news for cash-strapped motorists. The national average for regular grade gasoline dropped to $3.39 Friday, down 6 cents in the past week and down 27 cents in the past month. Prices remain 62 cents higher than year ago prices, yet 72 cents below the all-time high of $4.11 per gallon set in July 2008.
Crude oil rallied for three days of solid gains this week, reacting to shrinking supplies, better-than-expected economic data, a weakened U.S. dollar and signs Europe can control its debt crisis – all factors thwarting fears that demand will suffer. Despite gains this week, crude oil settled at $75.67 on Wednesday, its lowest settlement in over a year (September 23, 2010) and in the past month the commodity is down more than 15 percent. Employment data released Friday showed more jobs were created in September (103,000), not enough to send the unemployment rate below 9 percent, but perhaps enough to ease some concerns of an economic recession. After spending the majority of the week below the $80/barrel mark, crude oil closed the week up 5 percent at $82.98 Friday, its first weekly gain in three weeks.
In its weekly report, the U.S. Energy Information Administration (EIA) data showed crude stocks dropped 4.7 million barrels, to 336.3 million barrels (lowest level since January). Gasoline stocks fell 1.1 million barrels to 213.7 million barrels. The EIA also noted total petroleum demand levels were relatively flat, with the four-week average for all products running 1.3 percent below the same period last year.
“Prices at the pump continue their downward trend, bringing much needed relief to cash-strapped motorists,” said Windy VanCuren, Public Affairs Specialist for AAA Mid-Atlantic. “Gas prices have dropped to seven-month lows in recent weeks and although prices are not ‘low’ by any means, they have dropped almost 60 cents a gallon since peaking at $3.98 back in May of this year. A 60-cent drop in gas prices translates to an annual household savings of $748.”
Although gas prices continue to fall, which is welcome news to motorists who have undoubtedly felt the pressure from rising prices and a poor economic climate, the drop is not cause for celebration. Crude oil, which makes up almost 70 percent of gasoline prices, has declined because investors are worried the global economy and demand for crude oil are headed for a slowdown. Should the economy avoid a recession, analysts believe gas prices could rebound next year.
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