Gasoline prices fell again on August 19, with the national average falling to $3.89 a gallon while crude oil prices rose slightly to $91.56 a barrel.
The most common price is $3.49 a gallon, Patrick De Haan, head of petroleum analysis at GasBuddy, the Boston provider of retail fuel price information, told TheStreet. The cheapest 10% of stations sell gasoline for an average of $3.22 a gallon and the median price is now $3.72 a gallon. Diesel sells for $4,996 per gallon.
Consumers got a little reprieve in the past two months from higher gasoline prices, even as inflation in energy, housing and food costs has eroded wage income.
“Americans today will spend $430 million less on gasoline than they did in mid-June,” he said.
Drivers shouldn’t expect gas prices to drop for more than a few weeks.
“I think we’re in the last inning more or less of decline at the moment,” De Haan said. “We may stabilize just below $4 a gallon at the moment, but there is a lot of economic data that could push us one way or the other.”
Some regions of the US could see more price cuts, such as the West Coast, as their declines have been smaller compared to the South and Midwest, he said.
The maximum demand for gasoline ends
Peak demand for gasoline is over, de Haan said. The volume of gasoline sold has decreased every day this week except Thursday compared to a week ago.
Gasoline prices have declined since peaking at $5.03 on June 14. They have decreased by more than $1 per gallon, reflecting the drop and volatility in crude oil prices.
On August 4, crude oil prices fell to their lowest level since before Ukraine was invaded by Russia in late February. West Texas Intermediate reached $88 a barrel, while international benchmark Brent crude fell to $95 a barrel.
Crude oil prices have been volatile as news of weaker economic growth in China sent WTI lower earlier this week.
Economic data, such as lower inflation, could actually boost consumer confidence, resulting in higher demand for gasoline.
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“Furthermore, positive economic data could spark optimism and lead to increased demand, while bad economic data could lead to the opposite,” de Haan said.
Gas prices fall in the fall
Gas prices drop during the fall months because demand falls, consumers tend to drive less, and winter gas is cheaper to make.
Gasoline prices have passed their summer peak and refiners will start producing specified gasoline for the winter months. Those formulations are easier to make because of the products used to blend crude oil and also cost less, Richard Joswick, head of global oil analysis, S&P Global Commodity Insights, told TheStreet. He expects Brent crude prices to “fall below $100 before the end of the year.”
Refineries switch to producing cheaper winter gasoline in mid-September, de Haan said.
“Demand cools and motorists have less appeal to get outdoors as temperatures drop,” he said.
Presidential or midterm elections have no correlation with gasoline prices and there is no “conspiracy,” De Haan said.
Hurricane season could affect prices
Peak hurricane season is right around the corner and starts in late August, which could affect production and refining capacity.
A major storm “could disrupt oil production in the Gulf, as well as refineries in the region, should a major hurricane head into the area,” de Haan said.
A major hurricane making landfall along the Gulf Coast could result in a $10 spike in oil prices, raising gasoline prices by $0.25 a gallon, senior portfolio manager Rob Thummel told TheStreet. of Tortoise in Overland Park, Kansas.
An outage at refineries could push gasoline prices back to around $4, he said.
Colorado State University predicts an active hurricane season, estimating 18 named storms, eight hurricanes, and four major Category 3 or higher hurricanes.