Motorists are seeing a continuing drop in gas prices, with prospects of a $2 a gallon price at the pump a distinct possibility.
“This is the second year in a row that gas prices dropped in July, which is great news as we are in the middle of the busy summer driving season,” said Jim Lardear, director of Public and Government Affairs for Wilmington-based AAA Mid-Atlantic.
“Thousands of Delawareans are hitting the roads right now and these gas savings should make their trips more affordable.”
Gas prices are falling at the fastest rate since January due to cheaper crude oil costs and the resolution of some refinery issues, AAA reported.
Sunday’s national average price of gas is $2.65 per gallon which is about 85 cents per gallon less than a year ago and the lowest average for this time of year since 2009.
Delaware”s average gas price, as of Sunday, was $2.53 a gallon, down from $2.59 a week ago and well below the $3.42 paid a year ago.
Oil prices dropped sharply in July on oversupply concerns for the second year in a row. Strong fuel demand and refinery problems have kept gas prices higher than would otherwise be expected based on the cost of crude oil, AAA reported
However, gasoline and crude oil supplies continue to be plentiful, even as drilling is cut back and production of high cost crude is reduced.
The Energy Information Administration (EIA) noted in its weekly report –
- Gasoline production increased last week, averaging over 10.1 million barrels per day.
- Gasoline inventories dropped slightly, down 400,000 barrels to 215.9 million barrels.
- Gasoline demand took a step back and was at a six week low at 9.339 million barrels per day (bpd) and considered reasonable by most analysts.
- Crude oil inventories fell sharply, down 4.2 million barrels to 463.9 million barrels.
Average U.S. gas prices could possibly drop another 15 cents in August to catch up with the recent decline in the cost of crude oil.
Gas prices could drop more dramatically after Labor Day as people take fewer road trips and use less gasoline, which could lead to an even larger glut in petroleum supplies.
In addition, stations in many parts of the country can switch over to less expensive winter-blend gasoline on September 15.
“The recent price declines are hopefully just a precursor of much bigger savings to come at the pump,” said Lardear. “We could see many parts of the country make another run towards $2 per gallon by the end of the year if everything keeps running smoothly.”
AAA updates fuel price averages daily at www.FuelGaugeReport.AAA.com. Every day up to 120,000 stations are surveyed based on credit card swipes and direct feeds in cooperation with the Oil Price Information Service (OPIS) and Wright Express.
