US Gasoline Prices Expected To Fall Below $2.00 gal Soon

US Gasoline Prices Expected To Fall Below $2.00 gal Soon

$UGA, $USO

The price of Gasoline in the US is expected to fall below $2.00 gal by the the New Year. Gasoline has not been below that mark since Y 2009, when the US was in the depths of the Great Recession.

Drivers are already paying about 89 cents less a gallon than they were a year ago, and the price is expected to keep falling.

The national average price for a gallon of Gasoline reached $2.59 Monday, the lowest since 30 April.

According to AAA, the price of Gas had fallen for 26 straight days as of 10 August. Analysts predict that by Labor Day Gasoline will be another 10 to 15 cents lower.

GasBuddy analysts, have looked at the Key factors that are pushing prices lower. “We are seeing declines now, but the decrease should pick up steam in mid-September,” one analyst said.

1. A strong dollar makes Oil more expensive for foreign buyers, weakening overall demand and sending prices lower.
2. The anticipation of Iranian Oil hitting the markets has added to the drop in Oil and Gas prices. Once Iran is able to sell its Oil freely, the country will start unloading the 20-M bbls it has in storage. Iran can also begin producing 400 to 600-K BPD from its existing Oil fields. After a year of rebuilding and repair, Iran will begin to produce much more Crude Oil per day
3. The economic slowdowns in Europe and China will likely trim demand for gasoline in the global market.
4. Gas prices typically fall after the summer driving season in the US. Last year, average prices fell by more than a $1.00 between August and Christmas. The typical decline in the Autumn is between 35 and 65 cents.
5. Gas stations can begin selling cheaper winter-grade Gasoline on 15 September. Gas is more expensive in the Summer due to EPA rules requiring the sale of lower-volatility Gasoline, which produces less ground-level Ozone. It costs refiners about 25 cents a gallon more to make Summer-grade Gasoline.
6. In the Fall, Gasoline production slows in the US as Oil refineries undergo maintenance. While a decline in supply usually leads to an increase in prices, there’s also a decline in demand once Summer ends. This year, the fall in demand is expected to outweigh the fall in supply, adding more downward pressure on prices.

Crude Oil traders are signaling lower prices in the futures markets. Implied spot prices for some major Gasoline markets in November and December are already trading at around $1.25 a gallon.

The regions that will experience the lowest prices will be the Southeast, the Great Lakes, Oklahoma, Texas, the Gulf Coast and, toward mid-Winter, the Rocky Mountains.

Stay tuned…

HeffX-LTN

Paul Ebeling

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