|Monday, October 03, 2011 – John Patti|
|AAA Mid Atlantic reports that gas prices across the country have continued to decline ion the past week, an upside of recent domestic and international economic worries. This has sent the national average price below the $3.50 per gallon mark for the first time in seven months.
The national average for regular grade gasoline dropped to $3.45 Friday, down 9 cents in the past week and down 17 cents in the past month. Prices remain 76 cents higher than year ago prices, yet 66 cents below the all-time high of $4.11 per gallon set in July 2008.
Average retail gasoline prices in Baltimore have fallen 7.6 cents per gallon in the past week, averaging $3.31/g yesterday. This compares with the national average that has fallen 5.9 cents per gallon in the last week to $3.46/g, according to gasoline price website BaltimoreGasPrices.com.
Including the change in gas prices in Baltimore during the past week, prices yesterday were 66.4 cents per gallon higher than the same day one year ago and are 21.9 cents per gallon lower than a month ago. The national average has decreased 20.3 cents per gallon during the last month and stands 73.3 cents per gallon higher than this day one year ago.
“Motorists are certainly delighted that average gasoline prices are at their lowest since early March, but compared to prices a year ago, motorists are still feeling a pinch at the pump,” said Patrick DeHaan, GasBuddy.com Senior Petroleum Analyst. “It’s great to see gasoline prices falling, but at the same time, prices a year ago were nearly 75 cents less per gallon. The good news is that over the upcoming weeks, there will continue to be factors that could put more downward pressure on oil and gasoline prices. I continue to expect that average gasoline prices will bounce between $3.25-$3.50 for much of the rest of 2011,” DeHaan adds.
Crude oil rebounded somewhat early this week, following last week’s dramatic declines. Contributing to the commodity’s slight upswing this week – U.S. weekly jobless benefits claims fell to a five-month low, a weakened U.S. dollar and German lawmakers approved a euro zone bailout fund. However, crude oil could not sustain its upward momentum and slumped more than 3 percent on Friday following weak economic indicators from China, ongoing concerns about Europe’s debt problems and a stronger dollar. Crude oil prices have dropped sharply this quarter on fears of a U.S. recession and concern that Europe’s debt crisis will spread and damage the global economy further, ultimately hindering demand growth. U.S. crude has fallen nearly 14 percent this quarter, the sharpest drop since the last quarter of 2008. Crude oil closed the week at $79.20.
In its weekly report, the U.S. Energy Information Administration data showed crude stocks rose 1.9 million barrels, to 341 million barrels. Gasoline stocks rose 800,000 barrels to 214.9 million barrels. The EIA also reported revised data showing U.S. oil demand in July fell by 4% from a year earlier to 18.555 million barrels a day and was the lowest level for the month since 1996. The drop came as gasoline demand fell 3.7% to 8.96 million barrels a day, the lowest level since 2000. Revised total demand for July, typically the peak month of the summer driving season, was 2.3 percent below the earlier estimate, with demand for gasoline, the most widely used petroleum product, 1.3 percent lower than preliminary data showed.
“Not since March of this year have we seen the national average gas price below $3.50 per gallon,” said Ragina C. Averella, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Now that crude oil has settled in the $80 range, down from a three-year high this spring ($113.93 on April 29), gas prices are shifting downward as well, bringing much needed relief for cash-strapped motorists. American consumers are spending about $1.3 billion a day on their fuel purchases. Back on May 5 when retail gasoline prices peaked at 3.98 per gallon, we were forking over $1.51 billion a day. That’s a drop of $200 million per day, but it is still nearly $400 million more per day than we were backing on January 3, when pump prices were at their lowest price of the year – averaging $3.07 a gallon.” Analysts believe the recent drop in prices will likely last through the fall, but caution that what we see now won’t be the ‘new normal,’ but rather a starting point for winter and spring prices.”
The Week Ahead
How much lower will gas prices go? Some analysts believe the national average price could flirt with $3.00 per gallon by the end of this quarter, however, they caution that gas prices will likely rebound in early 2012. Although prices have declined in the past month, they aren’t exactly low. Gas prices are up 28 percent from a year ago and estimates show U.S. motorists are spending about $1.3 billion every day at the pump, putting the country in track to spend almost $490 billion on gas this year – the most in history.
CURRENT AND PAST GAS PRICE AVERAGES
Regular Unleaded Gasoline (*indicates record high)
… Amazing how it never goes down in price as quickly as it goes up. …