With the summer driving season well underway and demand for gasoline closing in on record levels, gasoline prices are falling as the price of crude oil appears to have peaked, at least for now.
AAA reported this week that pump prices have fallen 24 straight days and registered their lowest price for the Independence Day holiday since 2005. The national average price for regular unleaded gasoline is $2.27 per gallon, which represents a savings of three cents per gallon on the week and nine cents per for the month, according to AAA as drivers benefit from discounts prices are down
AAA estimated that the price of gasoline is 50 cents per gallon now compared with this same date last year.
GasBuddy.com pegged the average price of gallon across the U.S. at $2.259 per gallon, compared with $2.29 per gallon the week leading up to independence day and $2.365 per gallon one month ago when analysts were concerned about disruptions in the supply of crude oil.
AAA estimated a record-setting 43 million drivers hit the road during the Fourth of July holiday weekend.
“A rebounding economy and gas prices across the country that reflect substantial yearly savings are contributing to gasoline demand and vehicle miles traveled that are both on track to set all-time highs for 2016,” AAA noted.
Generally, higher demand puts upward pressure on prices, as evidenced this spring when prices increased on 84 of 104 days beginning at the end of February and jumped more than 65 cents during this span. However, market forces appear to overwhelming the normal trends.
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AAA cautioned that while prices may continue to slide through the month of July, further refinery issues, stronger than anticipated economic growth, geopolitical tensions overseas or hurricanes here at home that impact distribution and production all have the potential to reverse this trend and see prices again turn higher again.
However, global oil prices continue to point lower thanks largely to indications of increased supply. including the recent return of production from the Canadian Oil Sands and reports of strong output from OPEC member countries, AAA said.
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In addition, June production by OPEC had reached multi-year highs, including an increase in production in Nigeria where production reportedly increase by 150,000 barrels per day during the month despite continuing threats from pirates.
While these recent production reports have pointed to increased production, Nigeria remains volatile and an incident with the potential to impact production and send prices higher is always a consideration.
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Meanwhile, some analysts suggested that the price of crude may have reached its peak, which would imply gasoline prices could go lower, despite the continuing uncertainty in oil producing areas around the globe.