(WASHINGTON, July 23, 2012) Today’s national average price for a gallon of regular self-serve gasoline is $3.47. Today’s price is seven cents more expensive than the price one week ago, four cents more expensive than one month ago and 14 cents more expensive than the recent low price on July 2. The national average remains 23 cents cheaper than one year ago and 47 cents below the year-to-date peak price of $3.94 on April 5. 

Since the July 2 low, when retail prices averaged $3.33, the national average retail price has now increased for 20 of 21 consecutive days and has only declined for three days so far this month.  This compares to July of last year when national prices rose 17 cents and increased for all but six days during the month.

Drivers in all states and the District of Columbia continue to pay more than $3 per gallon at the pump; however, for the first time since February 18 of this year, drivers in only one state (Hawaii – $4.16) are paying an average price of more than $4 per gallon.  The cheapest gasoline in the country continues to be in South Carolina, where drivers are paying an average of $3.16.  The most expensive gas in the continental U.S. is in Connecticut, which has a state average of $3.81 and last week passed California ($3.78) to take over this unwelcome distinction.  The last time that Connecticut drivers had previously paid more at the pump than those in California was on February 9.

Retail gasoline prices have continued to rise as global crude oil prices have increased over the last month.  After West Texas Intermediate (WTI) futures settled at a recent low of $77.69 on June 28, the price last Thursday (just three weeks later) closed above $90 per barrel for the first time since the end of May.  Last week’s increase in crude prices was driven by returning supply worries surrounding geopolitical tensions in the Middle East and a shifting focus from the bearish global economic news and the associated demand concerns that dominated the market’s attention and pressured prices lower from April through June of this year. 

Geopolitical tensions with Iran saw oil prices increase dramatically earlier this spring as markets priced in the “risk premium” associated with that country’s threats to shutdown the Strait of Hormuz, through which one-third of global seaborne oil passes.  Global oil prices declined as tensions eased this spring, but escalating saber-rattling in recent weeks has pressured global oil prices higher again.  While Syria is not a major oil producing nation, continued violence and unrest in that country has also contributed to concerns of oil supply instability in the region.  Should Syrian unrest spread to major oil producing countries nearby, there would be concern of the potential impact on global oil supply.

This week began with another shift in the market, as global economic worries returned to the forefront following bearish news out of China and renewed euro zone debt crisis concerns.  Additionally, geopolitical tensions that were front-and-center last week eased following comments by an Iranian naval commander that Iran had no plans to shut the Strait of Hormuz. 

Advisors to the Chinese Central Bank predicted additional economic contraction in the third quarter of this year for the Chinese economy.  This would follow a reported second quarter growth in gross domestic product (GDP) of only 7.6 percent — the lowest number in three years.  In the euro zone, Spanish debt concerns weighed on the continent as speculation began that Spain might soon require a bailout.  Weaker global economies would be expected to consume less crude oil, which puts downward pressure on prices.  Additionally, because oil futures are traded in U.S. dollars, as the dollar strengthens against foreign currencies, as was the case today, these futures become relatively more expensive to purchase and are a less attractive investment. 

At the close of today’s formal trading on the NYMEX the price for WTI crude oil had decreased $3.69 to settle at $88.14 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, please contact Michael Green at (202) 942-2082.