Current Gasoline Price Break is not Low Enough

With the start of the so-called “summer driving season” this Memorial Day weekend, a majority of Americans are benefitting from lower-than-expected gasoline prices when spring started. However, even if prices are better compared to their highest attained rate in the early parts of April 2012, they are still higher versus their level in majority of the summer season’s beginning.

The current gasoline price average all over the U.S. is $3.645 per gallon. That is lower by 16 cents compared to last year and lower by 19 cents compared to the highest rate attained this year, according to AAA. However, it is still the top three highest gasoline price recorded for Memorial Day weekend. The top two highest gasoline rates at the beginning of the holiday weekend were in 2011 and 2008, respectively.

According to experts, despite of the recent fall of oil prices below $90 per barrel, a first since the month of November last year, the steady decline in gasoline prices may not go on further. ┬áTom Kloza, Oil Price Information Service’s chief oil analyst, anticipates gasoline prices moving slightly lower or slightly higher.

Although Kloza said that no sudden move in either directions may occur with gasoline prices, a significant worsening of Europe’s economic condition may possibly reduce the demand forecast and could bring extra relief on prices.

An agreement between the powers of the West and Iran on the latter’s nuclear program can help reduce oil prices by reducing the “risk premium” component of current crude oil prices in response to investor concern about the impact of Iranian sanctions and Middle Eastern supply disruptions.

However, for the most part, a drop of 7% in gasoline prices since the beginning of April may be the biggest relief that motorists can ask for.

Not all motorists are enjoying the gasoline price reduction suggested by the national average. Drivers of the West Coast are still spending almost the same amount on gasoline price that they were a couple of months ago. Insufficient supplies in the western part of the Rocky Mountains have maintained higher gas costs. Specifically, gas in California, Oregon and Washington State costs $4.29, $4.25 and $4.27 per gallon, respectively.

The highest gasoline prices are in Hawaii at $4.54 and in Alaska at $4.52, since it does not have any refining capacity, in spite of its oil supply.

However, aside from the Western States mentioned, no other state has gasoline prices at $4 per gallon at this time of the year.  The most affordable gas is in the Southern areas with South Carolina having the lowest average of $3.28 per gallon, Alabama at $3.33 per gallon, Tennessee at $3.34 per gallon and Arkansas at $3.35 per gallon.

By: Chris Termeer