It looks like gasoline prices are going to make this summer driving season a little easier for consumers. That is because pump prices have dramatically dropped after quite a significant decline in crude oil price.
On Thursday, the motorist and leisure travel group AAA said that some drivers may have already seen the highest prices of the year, as the summer average is most likely to drop much lower than last year’s average. In case you were not aware, last year’s national average price for a gallon of gas was $2.87 between Memorial Day and Labor Day.
As a matter of fact, AAA spokeswoman Jeanette Casselano comments, “AAA forecasts gas prices to be at least a dime cheaper [from current levels] through end of summer for a majority of motorists.” This national law could register at an average price of $2.70 per gallon for this season.
It should be noted, perhaps, that in the middle of this week, the national average price for a gallon of regular unleaded gasoline was already $2.795. One month ago, that price was $2.894; and one year ago the price was $2.94 per gallon. If you are not doing the math, that is a difference of roughly 10 cents on the month and 20 cents on the year.
To put this into market context, futures for crude benchmark US West Texas Intermediate rested at $51.68 per barrel, on Wednesday. This is the lowest price for a front-month contract since mid-January. Dow Jones Market Data suggests, then, the WTI settlement puts the commodity into a bear market, as prices are down as much as 22 percent from their recent high, which was in April.
In addition, crude oil prices are significantly lower, now, than they were last summer. At that time, prices ranged between $65 and $73 per barrel. In its report, AAA also commented, “Historically, crude oil prices and domestic gasoline demand have determined the price Americans pay at the pump in the summer months. And that’s no different this summer.”
To try and stabilize these numbers, then, AAA said it will monitor a handful of circumstances that could influence the price of crude oil. These strategies include reducing both global and domestic crude supply as well as exports and gasoline demand in the United States.