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U.S. Gasoline Prices Tumble
October 13, 2013
In case you missed it, U.S. gasoline prices are decreasing for the first time October 2012. The Energy Information Administration (www.eia.gov) recently reported the average price of a gallon of gasoline in the U.S. is $3.367 on October 7, 2013, down twenty cents per gallon from this time last year. Although this seasonal adjustment is normal for this time of year, there are a number of other factors that contribute to this downward trend.
- People are driving less-summer vacations are over. Kids are in school. On average though, total mileage driven remains fairly consistent, according to the Energy Information Administration (www.eia.gov). What is significant is that fuel use per distance driven has dropped 17 percent since 2007.
- Miles per gallon-fuel economy is a different story. The Christian Science Monitor (www.csmonitor.com) reports the average gas mileage of new cars of 24.8 hit an all-time high in May 2013.
- New cars-The USAToday reports “gas prices drop as consumers look for more fuel efficient transportation”. New car sales in September 2013 were the strongest in 5 years, up 13.4 percent. Auto industry experts are forecasting another record year for new car sales as U.S. consumers thirst for more fuel efficient (and green) autos.
- Overall U.S. economy is still sluggish-there are isolated signs the U.S. economy is improving. Demand for new housing (and existing) in Dallas and Houston TX is up 19 percent according to a recent report issued by Microstudy(www.microstudy.com).
- Uncertainty about U.S. economic shutdown layoffs default has made U.S. consumers a bit leery of making major purchases or long time commitments.
- Seasonal-people are finished with vacations, back to school, back to work.
- Weather-so far in 2013we have not had major weather conditions that affect the refining process from supply to distribution. No major snow storms crippling the Northeast metropolitan areas. No major hurricanes threatening the gulf coast.
- Refining Capacity-Refiner capacity utilization is down from 92.6 percent in July of 2013 to 86.0 in October 2013. Most refiners are in their normal change over routine changing from summer mix to winter grade which has fewer additives and is therefore cheaper. Inventories are high and most refineries have little maintenance planned. No accidents or explosions have occurred in recent months and energy analysts forecast a smooth ride on into 2014.
- Crude oil price have waffled a bit between $100/bbl. and $110/bbl., but no major correction as long as the demand and the market continue at a steady pace. OPEC seems to want price stability and avoid drastic spikes. Petro dollars speak loudly in OPEC’s members.
- U. S. Oil production continues to increase as the results from franking and oil shale kick in on a giant scale. We are at (or nearing) oil independence as production increases and oil imports decrease.
The average American consumer is already paying the price for the absence of a comprehensive Energy Plan in many ways. Given the numerous factors that affect global supply and demand, average gasoline prices will continue to fluctuate in 2014 -in some cases drastically depending on the afore-mentioned factors. Smart consumers will want to manage their energy consumption (including gasoline) to maximize their lifestyles and their budget.
Fred Kesinger
@FredKesinger