Gas Prices: AAA’s Fuel Gauge Report | October 22, 2012

(WASHINGTON, October 22, 2012) Today’s national average price for a gallon of regular unleaded gasoline is $3.67.  This price is 12 cents less expensive than one week ago and 15 cents less expensive than one month ago. This is the largest national week-over-week decline since 2008.  Retail prices plummeted during the second-half of that year, as the U.S. economy collapsed, and prices fell from the all-time peak of $4.11 per gallon on July 17 to $1.62 to end the year.  While the national average has been the highest on record each calendar day for more than two months, the gap between the price this year and the previous record continues to narrow.  Last Monday, the national average exceeded the previous record for that day, set in 2011, by 34 cents. Today that gap has narrowed to 21 cents.

AAA expects that gas prices across the country will continue to drop leading up to Election Day and will move even lower approaching the end of the year, barring any unforeseen forces.  Wholesale (RBOB) gasoline futures have dropped nearly 30 cents since the start of October, and retail prices, which typically lag wholesale price declines, are now beginning to reflect this drop.  In 2011 the national average price on November 6 was $3.41 and the price on Thanksgiving was $3.32.  AAA expects that the national average is likely to be between $3.40-3.50 when American’s head to the polls in just over two weeks and to be between $3.25-3.40 by Thanksgiving.

For the last several months changes in the national average have often obscured regional volatility, as prices in some states have risen dramatically even as prices in others have fallen.  Over the last week, however, the decline in the national average has reflected lower pump prices in every state except Alaska and Utah, as regional supply concerns begin to diminish and demand continues to weaken nationwide.  Prices in sixteen states are more than ten cents lower on the week and prices in four Midwestern states (Wisc., Ind., Ohio and Mich.) are more than 20 cents lower.

High gas prices continue to not just be a front-of-mind issue for motorists, but also a frequent topic in Washington and on the Presidential campaign trail.  AAA has consistently noted, because it is a publically traded global commodity, there is no silver-bullet solution to high gas prices and there is very little that politicians in Washington can do in the short-term to meaningfully impact prices.  This fact has been evident throughout 2012 as motorists have experienced volatile pump prices due to increasing global demand, geopolitical tensions overseas, international economic news, and most recently domestic supply and distribution issues.

Adding downward pressure to retail gas prices, are crude oil prices that have declined on global economic concerns and a somewhat stronger U.S. dollar.  After settling at $92.39 on October 9, West Texas Intermediate (WTI) crude oil fell back below $90 per barrel today, and remains well off of the recent high of $99 per barrel on September 14.  At the close of today’s formal trading on the NYMEX, WTI crude oil settled at $88.30 per barrel, down $1.32 on the day.

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