Average U.S. price of regular gas falls below $4
By John Waggoner
USA Today
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The nationwide average gasoline price fell below $4 a gallon for the first time in eight weeks, the result of declining demand from U.S. consumers and moderating crude oil prices.
The average price of regular gasoline fell to $3.955 a gallon last week, down 10.9 cents from a week earlier, the government's Energy Information Administration said yesterday. In Hawai'i, the statewide average for a gallon remained well above the $4 threshold at $4.479 a gallon. The Honolulu average was $4.388 a gallon, little changed from $4.382 a week earlier.
Hawai'i's average gas price was the second-highest in the nation after Alaska at $4.643 a gallon, according to travel organization AAA, which uses daily data from 85,000 filling stations provided by the Oil Price Information Service. Oklahoma had the lowest average gas price per gallon, at $3.686.
Nationally, diesel fuel fell to $4.603. The record nationwide gas price was $4.114, set the week of July 7, according to the Energy Information Administration.
Don't expect to see prices below $3 anytime soon, according to Tom Kloza, chief oil analyst for the Oil Price Information Service. Kloza says he expects average gas prices to fall to about $3.85 later this summer. The wholesale price of gasoline is now $3 to $3.20, Kloza says. Gas at the retail level typically sells for 60 to 70 cents a gallon more than the wholesale price, so he expects prices to fall further.
Pushing prices down:
The price of ethanol, which makes up about 10 percent of reformulated gasoline, has also fallen, Kloza says, from about $3 a gallon to $2.50.
"We're using a bit less, and now we're paying a bit less," OPIS' Kloza says.
Crude oil prices may well rise by the end of the year, says Evan Smith, co-manager of U.S. Global's Global Resources Fund. "This is just a normal correction in a long-term bull market in crude oil," Smith says. Growth in emerging markets, particularly in India and China, is still a powerful source of demand, even if U.S. drivers cut back.
Unrest, such as that in Nigeria, could push prices higher. Militants in that country sabotaged two oil pipelines yesterday, driving crude prices for September delivery up $1.47 a barrel. A major hurricane in the Gulf of Mexico, too, could send oil prices higher."We could always have a spike to $150 a barrel," Smith says.
