(WASHINGTON, May 7, 2012) Crude oil prices declined sharply over the last week, and the national average price of gasoline at the pump has continued a steady, month-long decline.  During this time the national average price has declined for 21 consecutive days and 28 of the previous 31.  Today’s national average price for a gallon of regular self-serve gasoline is $3.78.  This is four cents cheaper than the price one week ago, 15 cents cheaper than one month ago and 20 cents cheaper than one year ago. 

This Saturday, May 5, marked one year since the peak price of 2011: $3.98 per gallon.  The peak price to date this year occurred exactly one month earlier on April 5 when the national average reached $3.94.  Following the 2011 peak, prices fell for 50 of 54 days, decreasing by 44 cents during that period.

Oil futures recovered throughout the day today after global economic concerns pressured prices to an overnight low of $95.34 per barrel.  At the close of formal trading on the NYMEX, West Texas Intermediate (WTI) crude oil settled down 55 cents at $97.94 per barrel, which is the lowest closing price since February 6.  After settling at $106.16 last Tuesday — the highest price since late March — today’s settlement marked a decline of more than $9 per barrel in less than one week, which is the largest weekly decline of 2012.  

The results of European elections over the weekend and growing global economic concerns weighed on markets today.  Analysts viewed elections in both Greece and France as further evidence of limited support in those countries for the austerity measures enacted to address sovereign debt concerns.  This news, in addition to bearish global economic data in recent weeks, has increased concerns of global economic weakness.  Weaker economies overseas would be expected to consume less crude oil, which puts downward pressure on prices.  Furthermore, as economies overseas weaken relative to the U.S., the value of the dollar would be expected to strengthen.  As this happens, crude oil futures, priced in U.S. dollars, become relatively more expensive and thus a less attractive investment, which puts additional downward pressure on prices.

After rallying at the beginning of last week, crude oil futures reversed course following bearish manufacturing and jobs data from the euro zone on Wednesday, which outweighed signs of economic recovery in the U.S. and China.  These losses accelerated on comments by the Organization of the Petroleum Exporting Countries (OPEC) Secretary General that member countries would keep production high in an effort to depress global oil prices to a “fair” price of around $100 per barrel.  While WTI crude has traded near this target in recent weeks, a price difference or “spread” between WTI (the traditional U.S. benchmark product) and more liquid, global crude products, most notably Brent crude, has developed since the beginning of 2011.  This has led many to point to Brent as a more accurate benchmark for the global price of crude oil.  Even after a selloff last week, Brent crude continues to trade at more than $110 per barrel.

The above information is intended to provide perspective on fuel prices to AAA club spokespersons in speaking to the news media or in preparing news releases.  If you have questions about any information contained in this document, do not hesitate to contact Michael Green at (202) 942-2082.