Apart from states along the east coast, U.S. commuters were paying less for a gallon of regular unleaded gasoline during the first week of November than during the summer, when parts of the country were in the grips of a moderate price spike. While residents along the east coast continued to cope with gasoline rationing, most commuters across the country enjoyed relatively lower gasoline prices. The U.S. Energy Department said prices should continue to fall as the New Year approaches, leaving political clamoring over Strategic Petroleum Reserves in the past.
The U.S. Energy Department's Energy Information Administration reports that retail gasoline prices for a gallon of regular unleaded gasoline fell 36 cents since October to settle at $3.49 per gallon on Nov. 5. Motor group AAA notes a wide variance in prices, where commuters in South Carolina saw prices hit $3.09 at the beginning of this week while New York state drivers paid $3.99. For its November report, however, the EIA finds that gasoline prices, on average, should continue their decline for the rest of the year.
In April, U.S. lawmakers were pawing at the nation's petroleum reserves seeking relief from constituent ire over $4 per gallon gasoline, considered a threshold for consumer tolerance. In early January, some analysts had predicted a "better than 50 percent chance" that retail gasoline prices would hit the $5 per gallon mark in the United States. By July, AAA listed the national average for a gallon of regular unleaded at $3.62. That spike was in response to an oil pipeline leak and a separate incident involving a gasoline system in Wisconsin. Despite the temporary increase, however, the EIA reported then that it expected gasoline prices for 2013 to drop below the July average of $3.41
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The EIA, in its latest report, attributed the decline in gasoline prices to a decrease in crude oil prices, where Brent crude lost $5 to September highs to settle at $112 for October. The EIA said it expects the global crude oil market will "continue to loosen." Oil markets declined further last week after OPEC Secretary-General Abdallah al-Badri said oil markets were "very well-supplied."
The Energy Department's report said there was a certain degree of uncertainty in its short-term forecast because of the aftermath of Hurricane Sandy and a later Nor'easter that hammered the U.S. east coast. Even there, however, the EIA said gasoline prices should settle at around $3.43 by December. Some parts of the country haven't seen gasoline prices that low since the summer. Rationing systems for east coast states, meanwhile, should end later this week in time for commuters to fuel up for the upcoming holiday season in the United States.
In February, former Shell Oil CEO John Hofmeister said he'd "love to be wrong" about his forecast for $5 per gallon gasoline. With campaigning over in the United States, and refineries switching over to cheaper winter blends, cooler heads have prevailed. Hurricane Sandy notwithstanding, in August, Patrick DeHaan, a petroleum analyst at reporting Web site gasbuddy.com, told a Chicago newspaper that the summer spike in gasoline price was "the last hiccup" for 2012. In its November report, the EIA said it expect "a continuing decline in retail gasoline prices through the end of this year."
By Daniel J. Graeber of Oilprice.com