The old saying in the market is the best cure for high prices is high prices. That looks to be the case with high gas prices. Nationally, regular gasoline averages $3.47 a gallon, down 47 cents from this year’s high in April and well below the $5-a-gallon fears fanned earlier this year by energy speculators, Middle East tensions and oil refinery glitches that crimped supplies.Those issues appear to be over, at least for now. Thursday, benchmark West Texas Intermediate crude oil fell 4% to $78.20 a barrel, the lowest price since early October and off 20% year-to-date. Coupled with slumping wholesale gasoline contracts for fall delivery, “the market is suggesting gas below $3 by Halloween, and certainly by Thanksgiving,” says Tom Kloza of the Oil Price Information Service.
With production up, oil inventories at 21-year highs and tepid consumer demand, gas prices have fallen for 11 weeks. They’re expected to drop more sharply after the peak summer driving season. “Demand just isn’t there,” says Brian Milne of energy tracker Televent DTN, noting an Energy Department report that demand for fuel over the past four weeks has fallen 5% below year-ago levels. “It’s been dreadful.”
Barring supply disruptions heading into hurricane season — which helped drive pump prices to an all-time $4.11 high in July 2008 — consumers could soon be filling up at prices not seen since December 2010.
Motorists in some regions are already paying less than $3 a gallon. In South Carolina, where the average price is a U.S. low of $3.06, nearly 30% of service stations are selling gas below $3. Consumers elsewhere aren’t as fortunate. California averages $3.93 a gallon — the highest price in the continental U.S. But about 25% of the state’s gas stations are charging $4 or more, according to the Oil Price Information Service.
Year-to-date, gas prices are averaging $3.66 a gallon, vs. $3.53 in 2011.
Story contains some material form the Detroit Free Press