AAA Fuel Gauge Report | August 20, 2012
(WASHINGTON, August 20, 2012) Today’s national average price for a gallon of regular self-serve gasoline is $3.72. This price is fractions of a penny less than yesterday; however it is two cents more expensive than one week ago, 22 cents more expensive than one month ago and 14 cents more expensive than this day in 2011. Not only is today’s price higher than the same day last year but it is the highest ever for this day in history. This marks the first time since April 23 that a national average in 2012 was the highest ever for the calendar day. The second highest average for this day was on August 20, 2008 at $3.717 a gallon and the third highest was last year at $3.578 a gallon. On this day in 2008 the national average price of gasoline was falling dramatically from the all-time high of $4.11 on July 17 of that year to a low of $1.62 on December 30. In 2011, the rate of decline was not as steep as 2008 but prices still fell after Labor Day, dropping from $3.66 on September 5 (Labor Day) to $3.21 on December 21. Even with an anticipated post Labor Day decline in prices, the daily national average likely will continue to set a new record for each calendar day as we head into the fall.
The week-over-week, month-over-month and year-over-year price increases are front of mind for motorists across the United States. However today’s decline from yesterday does mark the first time this August that the national average has fallen overnight and highlights that the rising national average has slowed over the last week. AAA continues to expect that, given current conditions, prices at the pump will decline following Labor Day as the busy summer driving season draws to a close and the switch over from summer- to winter-blend gasoline begins to take place.
While the national price at the pump has risen 20 cents to date in August, it remains 22 cents below the yearly peak price for 2012 of $3.94 on April 5 and 6 and 39 cents below the all-time high set in 2008.
As discussed in last week’s AAA Fuel Gauge Report, while the national average has risen steadily since late July, the steady increase has obscured the regional price spikes that have characterized the August increase. While the national average price is 14 cents higher than a year ago, the year-over-year increase is most dramatic in the Midwest and on the West Coast, where prices have been impacted by regional supply and distribution issues.
The first week in August saw supply issues in the Midwest, primarily with the Enbridge pipeline in Wisconsin, send retail gasoline prices significantly higher in that region. As these issues were resolved and prices in the Midwest and surrounding areas began to stabilize or in some instances even decline, a fire at the Chevron refinery in Richmond, California on August 6 sent West Coast prices sharply higher and continued to tug the national average upward. A map of notable supply and distribution issues this summer is below. Included in this map are disruptions on the Gulf Coast; however the high refining capacity in that area tempers some of the effect of supply issues on pump prices in the region. With the impact of these regional issues either resolved or priced into the market, the increasing national average has slowed over the last several days.
Domestic supply and distribution issues have been the driving force behind rising pump prices the last several weeks as oil prices have drifted slightly higher and have provided some additional support. For the first time since mid-May of this year, West Texas Intermediate (WTI) crude oil has now settled above $90 per barrel every day for more than two weeks. This support for oil prices has been attributed to positive global economic data and continued geopolitical tensions with Iran. This streak continued today as the price of WTI declined 4 cents to settle at $95.97 per barrel at the close of formal trading on the NYMEX.
Rising gas prices and sanctions with Iran have prompted some to call for a release of oil from the Strategic Petroleum Reserve. AAA does not believe this is an appropriate action at this time. The Reserve is designed to be a tool to protect American motorists from emergency disruptions to supply and distribution, not as a response to high prices due to non-emergency supply and demand market fundamentals. The impact on global supply caused by the Iran sanctions policy does not meet that condition at this time.