Good news for motorists
Experts predict lower summer gas prices
By SUZETTE PORTER
| Article published on Sunday, July 5, 2009 |
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Barring a disaster, gas prices this summer will be much lower than last year. In fact, some experts say pump prices may have already peaked for the season.
After eight weeks of steady price increases, the national average price for a gallon of unleaded dropped by 5 cents last week to $2.64 or $1.64 below the price on the same date last year, according to the July 1 Federal Energy Information Administration’s This Week in Petroleum report.
AAA’s Daily Fuel Gauge Report on July 5 showed the national average for regular gas at $2.61 - down 3 cents from the week before. The average price in the state of Florida was slightly higher at $2.64.
In the metro region of Tampa-St. Petersburg-Clearwater, motorists enjoyed prices marginally lower than the national and state average. The local price of $2.60 is 4 cents lower than the week before and $1.40 less than last year.
The question is: Will prices stay low or will they follow the trend of past years to continually increase throughout the summer?
Unless something happens to interrupt imports or operations at processing plants or refineries, experts are predicting less volatility in oil and gas prices in the future.
AAA Auto Club South released predictions of several experts on June 28. In a press release, AAA revealed that 21 of 38 analysts, or 55 percent, surveyed by Bloomberg said they expect oil futures to decline in the week ahead. Only 8 of 38 expect prices to increase. Nine remained neutral.
Additionally, according to Retail Fuel Watch, an oil industry weekly published by Oil Price Information Service, falling wholesale prices point to further drops ahead for retail prices.
The EIA’s latest report also reflects the experts’ thinking.
“Despite understandable concern over the increase in U.S. gasoline prices to date in 2009, it appears that the summer market may be near, if not past, its peak,” the EIA said.
The EIA explained that a number of variables drive retail gasoline prices with global crude oil prices and the balance of supply and demand being the two most crucial factors.
Last year’s high pump prices, which peaked at $4.11 in early June, were due to record high crude oil prices, the EIA said. The crude oil prices also were supported by strong growth in global product demand, especially for diesel fuel and other distillates, during a time with OPEC’s production was down from its prior-year level.
Last summer, the peak driving season was much different than past years due to a combination of high gas prices and the weakening economy. The result was a significant reduction in demand.
“Crude oil prices peaked in early July 2008, and by late November both demand and prices for gasoline had dropped to their lowest levels for that time of year since 2003,” according to the EIA report. “Last year ended with a national average price for regular gasoline of $1.61 per gallon, the lowest price in nearly 5 years.”
In 2009, crude oil prices fell to less than $40 a barrel, compared to the peak price of more than $130 a barrel last summer. Gasoline demand has remained low and attempts by OPEC to raise oil prices by reducing production has yet to have any impact, the EIA said.
Due to some signs that the economy was making a comeback as well as other factors, gasoline demand began increasing, the EIA said. However, gasoline production and imports remained low due to expectations of continued low demand.
Increases in gas prices over the past several weeks “prompted consumer anxiety,” the EIA said, “despite the fact that retail prices are at their lowest end-of-June level since 2005.”
Finally, after eight weeks of increases, the price for imported crude oil has dropped again and gas prices are falling.
“Barring an unexpected supply interruption or international price shock, the June 22 price of $2.69 per gallon may be the highest weekly regular gasoline price for the summer of 2009,” the EIA said.
When AAA Auto Club South made its annual predictions for travel over the Fourth of July weekend, Gregg Laskoski, managing director of public relations, gave his opinion on summer gas prices.
“Last year at this time, we saw the national average price of gasoline increase from $4.07 to $4.10 on July 4th. Fortunately, it’s a much different story this year. All the indicators reflect that the peak price is behind us and we can now expect retail gasoline prices to edge downward.”
For more information on gas prices in Tampa Bay region, visit www.fuelgaugereport.com.
To read the EIA’s This Week in Petroleum report, visit www.eia.doe.gov.
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Article published on Sunday, July 5, 2009
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