Gas Under $3 a Gallon? Rejoice!
NEW YORK ( MainStreet) The recent dips in gasoline prices in some parts of the U.S. are a welcome relief, but consumers should not plan on the low prices to stay at the pump since some of the declines only occurred in key regional areas such as the Gulf Coast and Midwest.
Gasbuddy.com found that gas fell below $3 a gallon in Arkansas, Kansas, Missouri, Oklahoma and Texas.
Overall, the weekly U.S. average gasoline retail price is now $3.26 per gallon on December 9, according to the Energy Information Administration. Crude oil makes up 71% of gasoline prices, while taxes contribute 13% and vary by state and the remaining 16% comes from refining, distribution and marketing costs.
Gasoline prices fell by more than 40 cents from the beginning of September through the middle of November. The U.S. weekly gasoline retail price rose by 8 cents per gallon to reach $3.27 per gallon on December 2 because of unplanned refinery maintenance and higher crude oil prices, the EIA said. Last year the annual average regular gasoline retail price was $3.63 per gallon and is expected to average $3.50 per gallon in 2013, but drop to $3.43 per gallon in 2014.
Recent gasoline price declines are due to a seasonal switch over to winter motor fuel that caused a slight run up during the October changeover coupled with lower oil price, said Campbell Faulkner, chief data analyst of OTC Global Holdings.
"While WTI and Brent crude oil prices have been at relative highs the last few months, the price decline of oil has placed downward pressure on refined product prices," he said. "WTI inputs for refiners are seeing further negative price pressure in mid-continent and Midwest markets due to continued production increases easing gasoline prices."
Consumers might expect some relief at the pump but should not expect any large discounts, Faulkner said.
"The 2014 fuel outlook is much the same with prices trending gently downward following WTI prices," he said. "Additionally, seasonally lower unplanned refinery outages have helped keep prompt prices low while the forward curve remains optimistic for continued backwardation of gasoline."
The average weekly retail gasoline price of $3.26 per gallon is $0.003 less from a week ago and $0.080 from 2012, the EIA said.
Prices are likely to continue rising next year, said Chris Faulkner, CEO of Breitling Energy Companies, a Dallas oil and gas exploration and production company.
"Nationally, the average price of a gallon of regular has increased to $3.26 per gallon over the past two weeks and that is due to two drivers: slightly higher crude oil prices and some profit margin recovery at the retail station level," he said. "With the rise in WTI crude prices, I would expect this trend to continue through the start of 2014 as we should see a few more pennies added at the pump over the next several months, because the U.S. refiners need the same sort of gasoline margin recovery as retailers just received over the past two weeks. This price increase continues if WTI trends further upward."