AAA: Gas Prices Could Actually be Lower

Gas Prices Could Actually be Lower
Photo Courtesy: UPI

WASHINGTON, Sept. 4 (UPI) — U.S. retail gasoline prices moving into the Labor Day holiday are at historic lows, but could be even lower had it not been for refinery problems, AAA said.

“Americans should find good deals on gas prices in most parts of the country heading into the busy Labor Day weekend,” AAA spokesman Avery Ash said in a statement.

The motor club reports a national average retail price for a gallon of regular unleaded gasoline at $2.42, about 3 percent less than last week and 8.3 percent lower than one month ago. The average price of $2.60 for August was the lowest for than month since 2005, but still high relative to the cost of crude oil.

The U.S. benchmark price for crude oil, West Texas Intermediate, closed Thursday at $46.75, which is more or less relative to the price for WTI in January.

“Average gas prices are about 41 cents per gallon more expensive than the lowest daily average in January,” Ash said. “Gas prices are higher than would otherwise be expected due to high demand and ongoing refinery problems, along with the higher cost to produce summer-blend gasoline that is required in many areas.”

An outage at BP’s refinery in Whiting, Ind., last month skewed the national average price higher because gas prices in the Great Lakes states spiked by up to 50 cents per gallon. Low output from a Chevron refinery in California, meanwhile, is keeping prices elevated in many regional states.

Lower gasoline prices can also lead to more travel, increasing consumer demand. The Federal Highway Administration said U.S. drivers logged 1.5 trillion miles during the first half of the year, an all-time high. Higher demand for fuel can keep prices at the pump higher relative to crude oil. Demand drops off after Labor Day and refineries start shifting to a winter blend of gasoline that, because of fewer emissions requirements, is cheaper to produce.

“There is good reason to believe that cheaper oil costs, a seasonal decline in driving and the switchover to less costly winter-blend gasoline will continue to push down prices through the end of the year,” Ash said. “Gas prices in many parts of the country could fall below $2 per gallon by Christmas if the cost of crude oil remains low.”


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