After a year of bad luck with gas prices, consumers will see prices come down at the pump pretty dramatically in the coming weeks,” said Phil Flynn, energy analyst at PFGBest Research.
As we approach the end-of-summer driving season, when we flip back to cheaper blends of oil and we’re seeing that the global demand for oil was not as strong as we thought it would be, we could see prices fall as much as 25 cents to 50 cents at the pump,” he added.
In the past week alone, the price per gallon of gasoline has tumbled 7 cents to a U.S. average of $3.63 on Aug. 10, according to AAA’s Daily Fuel Gauge Report. That’s on par with month-ago averages, yet still painfully higher than the year-ago average of $2.78 a gallon.
And though gasoline demand is down roughly 2% compared to a year ago, the prices are at the second-highest level ever, AAA said. The record was set July 17, 2008, at $4.11 a gallon average throughout the country.
On Wednesday, the barrel price for crude oil futures climbed to $82.89, off of Tuesday’s all-year low, after the Energy Information Administration turned in four-week results of slumping demand, following a five-month trend. The consumer call for oil byproducts has fallen as gasoline costs have risen but the jump in crude-oil prices Wednesday was powered by speculation that the Federal Reserve will pump more money into the economy to stimulate its growth.
The spring and summer seasons tend to be toughest on gas prices. This year was no exception, but there were outside forces like civil unrest in the Mideast and the flooding that overwhelmed much of Mississippi that disrupted production, keeping prices higher than they might normally have been through July.
Prices typically peak the first two weeks of May, like they did this year at $3.98 a gallon on May 5. Then prices moderate some before climbing again ahead of the Memorial Day weekend. This year, however, prices went down slightly, to $3.79 a gallon by May 30.
Bucking the historical pattern again, they tumbled to $3.57 a gallon by the Independence Day weekend, according to AAA. But they inched back up this year after the holiday and have stayed at those loftier levels until this week.
A positive U.S. weekly jobs report helped ease investors' recession fears, boosting the Dow Jones industrial average by 423.37 points, or 3.95%, to 11,143.31 after a plunge of 519 points Wednesday. The Standard & Poor's 500 index rose 51.88 points, or 4.63%, to 1,172.64. The Nasdaq composite index jumped 111.63 points, or 4.69%, to 2,492.68. Gold futures fell 2% to $1,748 an ounce.
In New York futures trading, crude oil for September delivery slipped as low at $81.03 a barrel on French debt concerns but recovered along with equity markets to close at $85.72 a barrel, up $2.83.
Still, energy analyst Fadel Gheit called the overall decline in oil prices — down nearly $14 a barrel since late July — "a very ominous sign."
"Oil is crashing because there is less demand for it. There haven't been any really good economic signs that we can attribute to this," said Gheit, senior energy analyst for Oppenheimer & Co.
The dearth of encouraging news could have another dampening effect: Nervous consumers are more likely to hold on to any extra money that lower pump prices would bring rather than spend it to help stimulate the economy.
"It's kind of like getting a reduced price for Dodger tickets at a time when the team is kind of awful," said Tom Kloza, chief oil analyst for the Oil Price Information Service, an energy-tracking company based in Wall, N.J.
In California, the average price of a gallon of regular gasoline was $3.76 on Thursday, down from $3.815 a week earlier, according to the AAA Fuel Gauge Report, a daily survey of fuel retailers based on credit card receipts. Nationally, the average was $3.62 a gallon, down from $3.703 a week earlier.
Earlier this week, oil dropped to its lowest levels since September, eventually closing at $79.30 a barrel, well off its high for the year of nearly $114 a barrel on the New York Mercantile Exchange. Analysts are thus predicting that the average price for gasoline in the U.S. will fall in the coming weeks, with the predicted size of the decline ranging from 30 cents to 50 cents a gallon.
"If oil remains low, the national average for gasoline will fall to $3.25 to $3.40 in the next two to three weeks as retailers slowly lower their prices to reflect their drop in cost," said Patrick DeHaan, senior energy analyst for GasBuddy.com, a website that lists retail gasoline prices.
Though motorists would welcome such relief, some say they aren't in a hurry to spend the savings.
"It would be nice, but I think this is such a bad economy that we are still worse off now than we were last year. We would save the money," said Henry C. Chen, 51, a driver's education and health teacher at Bellflower High School.
Chen considers himself lucky: He and his wife, Susan, have jobs and health benefits. But a home renovation three years ago left them short on savings.
So the couple look for the cheapest gasoline and religiously use coupons on household items. Henry Chen is nursing a 1998 Volkswagen Passat rather than shelling out for a newer car and higher insurance premiums in exchange for potentially better gas mileage.
No comments:
Post a Comment