Get Ready for Lower Gas Prices
~ By Burt Carey
Great gasoline prices are coming your way this fall. Thanks to a glut of cheap crude oil on the market that continues to drop in price as summer wanes, consumers can look forward to paying close to or less than $2 per gallon at the pump this fall, according to AAA and GasBuddy.com.
“There will be thousands, even tens of thousands of stations below $2 by the time we’re into football season,” said Tom Kloza, chief oil analyst for the Oil Price Information Service, which monitors pricing for AAA.
The national average for a gallon of regular unleaded gasoline hit $2.59 in early August, following the trend of lowering crude oil prices throughout the month of July.
Kloza said the cheaper crude prices, if they hold out through the fall, could lead to gas prices 60 to 70 cents less than current pump prices. The price of a barrel of crude was $45 on Aug. 11, which is less than half of its cost a year ago and leading to a 6 percent drop at the pump in the past month.
In California, which has the country’s highest pump prices at an average of $3.56 per gallon, prices have dropped 81 cents per gallon from a year ago. South Carolina has the nation’s lowest gas prices, just $2.19 per gallon.
In January the average cost of unleaded fuel was $2.03 per gallon, a price that could easily be surpassed this year, despite California’s higher cost.
Gas prices are typically higher during summer because stations are required to sell a blend that costs more but meets environmental standards set by the Environmental Protection Agency. That requirement ends Sept. 15, when stations begin being stocked with less expensive winter blends.
Senior petroleum analyst Patrick Dehaan of Gas Buddy sees a similar trend. “We are seeing declines now, but the decrease should pick up steam in mid-September,” he said.
There are several reasons for the low prices of crude oil and, in turn, gas. First, the dollar is stronger these days than it has been, making oil more expensive for foreign buyers. Next, industry analysts are expecting the Iranians to begin selling its 20 million barrels of surplus, in addition to adding some 400,000 barrels per day to a market that’s already flush with crude.
The economic slowdown in Europe (especially Russia) and China has lowered worldwide demand for oil. Another factor is that the demand for gas in the United States falls off as fall school semesters begin and families don’t travel as much as they did during summer. And finally, futures trading markets have been signaling that lower oil prices will dominate the market this fall.
Just as the news of lower pump prices was coming out this month, a BP refinery in Whiting, Ind., reported an unexpected shutdown for unplanned repairs may delay decreased costs in the upper Midwest and Great Lakes region. Drivers in Illinois, Michigan, Indiana, Ohio, Wisconsin, Kentucky and Missouri are likely to see a brief spike in gas prices as repairs take place.