The national average price of gas posted the largest July decline in six years with average prices dropping about 16 cents per gallon during the month as refinery production remained strong.
Gas prices fell 30 out of 31 days during the month, making it the first time on record that prices have fallen this consistently in July. The national average is now around $3.50 a gallon.
In Delaware, a price of $3.35 was common, with a few stations posting prices in the Newark area that were hovering around the $3.30 mark. Even in Rehoboth Beach, which sees higher demand this time of year, a $3.40 a gallon figure was posted, according to the Gas Buddy website.
“Falling gas prices are nearly the opposite to what we usually see this time of year,” said Jim Lardear, director of public and Government Affairs for AAA Mid-Atlantic, Wilmington. “Refineries are running at full tilt and there is more than enough gasoline in the market, which has helped bring down prices despite multiple overseas conflicts.”
Gas prices have declined primarily due to record-high refinery production and adequate supplies. Domestic refineries have processed the most crude oil on record during the previous four weeks, according to data by the Energy Information Administration. This has led to high use rates, particularly for refineries that have access to North American crude oil supplies.
One of those sites is the Delaware City Refinery of PBF Energy, which is getting a larger chunk of production from crude oil transported from North Dakota and Canada. The refinery is winding up a project to expand its rail facilities at the refinery. That is expected to further boost rail shipments.
In recent years gas prices have increased considerably in July due to significant demand and occasional problems with refinery production. From 2011-2013, gas prices nationally increased in July by an average of 16 cents per gallon.
Gas prices began the current slide in the last days of June. The national average price of gas has declined for 33 out of 34 days for a total of about 17 cents per gallon.
The decline in gas prices has come despite conflicts overseas in places like Iraq, Libya, Gaza and Ukraine. While oil prices remain expensive, prices are relatively stable because oil production and export levels have not noticeably changed, AAA noted.
The monthly average price of gas in July was $3.60 per gallon. Due to the high cost of gas at the beginning of July, the monthly average was slightly higher than last year’s monthly average of $3.58 per gallon. Gas prices averaged $3.67 per gallon last month.
“Gas prices may cost less than in recent years this August as long as refinery production remains strong and oil costs do not rise due to unexpected issues,” continued Lardear. “The biggest threat to continued falling prices would be a major hurricane striking the U.S. Gulf Coast. Prices also could rise or remain flat if refineries cut back on production or if there are any major refinery outages.”
Hurricanes often strike in August, which can disrupt oil production, refinery facilities and pipelines. In August 2012, Hurricane Isaac swept ashore in Louisiana. The brief closure of surrounding refineries helped increase the national average price of gas by 11 cents per gallon over nine days.
Gas prices have decreased in August for three of the previous five years. Last year the national average fell about three cents per gallon during the month, but the average spiked 33 cents per gallon in August 2012.
August and July generally are the busiest driving months of the year, according to data collected by the Federal Highway Administration.
Consumers have paid the lowest gas prices since the middle of March. Today’s national average price of gas is $3.52 per gallon, which is a fraction of a cent higher than yesterday. Today’s higher average was the first increase since June 27. By comparison, drivers paid about 11 cents more per gallon at this time last year.
Gas prices this year generally have remained slightly less expensive on average than in recent years. The annual average so far this year is $3.53 per gallon, which is the lowest average for the first seven months of the year since 2010. Last year the national average through July 31 was $3.57 per gallon.
