Vancouver’s average price for regular gasoline stands at $3.46 per gallon, down from $3.52 a week ago, according to AAA Oregon/Idaho. One month ago, a gallon of gasoline cost $3.69 per gallon in Vancouver, and a year ago it was $4 per gallon.
Oregon’s average price for regular gasoline dropped by five cents for the week and now stands at $3.50 per gallon. That’s the lowest price since early February. AAA predicts further drops in gasoline prices in the remainder of the year.
HOUSTON — Gasoline pump prices are poised to drop to the lowest since February 2011 by New Year’s Eve as supplies increase more than demand, providing a lift for consumers in an economy struggling to recover from the deepest recession since the 1930s.
Retail prices will probably sink to an average $3.15 a gallon by Dec. 31, from $3.344, said Michael Green, a spokesman in Washington for AAA, the nation’s largest motoring organization. The highest seasonal inventories in three years are set to rise as plants return from scheduled maintenance. Refining capacity in the fourth quarter will be 410,000 barrels a day higher than last year while demand climbs 10,000 barrels, the Energy Information Administration estimated Oct. 8.
Vancouver's average price for regular gasoline stands at $3.46 per gallon, down from $3.52 a week ago, according to AAA Oregon/Idaho. One month ago, a gallon of gasoline cost $3.69 per gallon in Vancouver, and a year ago it was $4 per gallon.
Oregon's average price for regular gasoline dropped by five cents for the week and now stands at $3.50 per gallon. That's the lowest price since early February. AAA predicts further drops in gasoline prices in the remainder of the year.
U.S. refiners are making the most gasoline ever for this time of year, having expanded to take advantage of ample domestic and Canadian crude. U.S. oil production grew in September to the highest level since May 1989 as advances in drilling techniques boosted output from shale formations. The U.S. met 87 percent of its own energy needs in the first six months of 2013, on pace to be the highest annual rate since 1986.
“We’re in a longer-term downtrend with retail gasoline prices because of reduced demand, increasing U.S. production of oil ,as well as increased refining capacity for gasoline,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said in a telephone interview.
Retail prices have fallen 25 cents since the end of August, as the 2013 Atlantic hurricane season was shaping up to be the first in almost two decades without a major storm disrupting Gulf Coast production. The season runs from June 1 to Nov. 30.
As plants return from seasonal work, production should increase. In the past five years, refinery runs have climbed an average 303,000 barrels a day in the fourth quarter as seasonal repairs ended.
The U.S. was awash in gasoline as refiners shut units for maintenance. Inventories were 217.3 million barrels as of Oct. 11, the most for this time of year since 2010, EIA data show. As many as 900,000 barrels a day were planned to be offline in October, the peak of the U.S. fall turnaround season, according to Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
Production of the fuel in the week ended Oct. 11 increased to 9.34 million barrels a day, 3.2 percent higher than a year earlier and the most for this time of year going back to 1982, according to EIA data. There was enough gasoline in the U.S. to cover 24.6 days of supply, 6.8 percent above the five-year average.
“There’s a surplus of gasoline,” Dominick Chirichella, senior partner at the Energy Management Institute in New York, said by phone. “Refinery runs are going to go up when the maintenance season ends and we’re going to produce more gasoline than we need.”
The drop in gasoline prices is bringing relief to consumers just as the nation emerges from a government shutdown, the labor market expanded slower than projected in September and existing home sales fell for the first time in three months.
Employers added 148,000 jobs in September, following a revised 193,000 gain in August, Labor Department figures show. Home sales dropped 1.9 percent in September to a 5.29 million annual rate from a pace of 5.39 million in August, the National Association of Realtors said Oct. 21.
“Lower prices put more money in consumers’ pockets to spend on things other than fuel,” Andy Lipow, president of Lipow Oil Associates in Houston, said in a phone interview.
Retail prices are 32.1 cents below a year ago, data from Heathrow, Fla.-based AAA show. The last time the national average dipped below $3 a gallon was Dec. 21, 2010, according to AAA.
Some filling stations in 23 states are already selling gas for below $3, AAA’s Green said. The cost for drivers in as many as 10 U.S. states may average less than $3 by year’s end, according to Green. The average price last Dec. 31 was $3.292, after falling 37.3 cents between Oct. 21 and the end of the year.
The lowest average is in Missouri where drivers paid $3.045, AAA’s website showed. Within that state, Kansas City drivers paid $2.989 a gallon and St. Joseph’s average was $2.977. California had the highest prices in the lower-48 states at $3.771 a gallon.
WTI crude is poised to extend its decline, pressured by bulging stockpiles, Washington political gridlock that led to the 16-day government shutdown this month and decreasing fears of a broad Middle East conflict. Crude prices will drop another $2 by Dec. 31, according to the mean of 16 analysts and traders surveyed by Bloomberg Oct. 21.
Gasoline futures will continue weakening, averaging about $2.55 in November and $2.50 in December, according to estimates from John Galante, a global gasoline analyst with Energy Security Analysis Inc. in Wakefield, Mass.
“We definitely see there is plenty of supply in the gasoline market and we expect crude prices to soften toward the end of the year into next year,” Galante said by phone .
