As summer nears, expect gas prices to go ... down? - KAIT Jonesboro, AR - Region 8 News, weather, sports

As summer nears, expect gas prices to go ... down?

By MARK WILLIAMS
AP Energy Writer

Gas prices are poised to fall as Memorial Day approaches, a welcome change for motorists who have gotten used to seeing increases cut into their summer vacation money.

Experts who had been predicting a national average of more than $3 per gallon by Memorial Day now say prices have likely peaked just beneath that threshold. Rising supplies and concerns about the global economy have helped send wholesale gasoline prices plummeting by 22 cents a gallon since last week.

"Gasoline supplies are about as good as they've ever been going into the summer driving season," says oil analyst Phil Flynn of PFGBest in Chicago.

The decline in prices is starting to filter down to motorists, but it will take several weeks for the full effects to be reflected in pump prices, which average $2.90 nationwide.

By summer, the nationwide average could be below last summer's peak of around $2.70 a gallon, says Tom Kloza of Oil Price Information Service. In July 2008, the retail price of regular gasoline peaked at $4.11.

Economists say the coming drop in energy costs will not have a significant impact on overall consumer spending or economic growth. But motorists will feel better having a little more money to save or spend on clothes, dinner or a summer vacation.

Chrystal Harned, who paid $3.01 a gallon the other day, says she will be more likely to take a road trip this summer if prices fall.

"It's good to go see people and get out of the town and spread your wings a little bit," says the 36-year-old waitress and bartender, who lives just outside Rochester, N.Y. She says business is picking up these days, but "you don't want to put it all in the gas tank."

From their peaks on May 3, oil prices have declined by 13 percent to $75.65 a barrel. Wholesale gasoline prices have declined by 9percent to $2.21 a gallon.

Analysts were forecasting a nationwide retail average well above $3 a gallon just a few months ago. So what changed?

- The European debt crisis escalated. This undermined confidence in the strength of the global economic recovery and prompted analysts to lower their energy demand forecasts. The crisis also sent institutional investors flocking to the dollar, a relative safe haven. And, these days, when the dollar goes up, the price of oil goes down.

- Supplies of gasoline have risen steadily. As of Friday, the U.S. had 222 million barrels of gasoline in storage - about 5 percent more than a year ago. Output from refineries has been growing at a faster pace than demand.

- Political unrest in oil-producing nations has been muted. This is a wild card that could change quickly. But lately, violence in Nigeria and tensions in the Middle East have been relatively minor, traders say.

The massive oil spill in the Gulf of Mexico has had no impact on fuel prices because it's had only minimal impact on petroleum production, analysts say.

Predictions of $3-a-gallon gas have come true in 10 states, including California, Hawaii, Illinois, New York and Nevada. Distance from the nation's refining hub along the Gulf Coast or high taxes are contributing factors.

If pump prices fall by 22 cents per gallon - in line with the decline at the wholesale level - that will knock about $11 off the fuel bill of a typical motorist burning 50 gallons a month.

Economist Ken Mayland of ClearView Economics suspects most drivers will view the lower prices as temporary and that they'll pocket the savings.

The federal government's Energy Information Administration has been forecasting a nationwide average of $3 a gallon for at least a part of the driving season. It's not ready to concede that gasoline prices have reached their high point.

EIA's Tancred Lidderdale said a resolution to the debt crisis in Europe, a decline in the dollar and fresh signs of global economic growth could send oil prices back up.

"The market is volatile," he says.

___

Associated Press Writer Ben Dobbin in Rochester, N.Y., contributed to this report.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • Region 8 News</span><a class="customMoreLink" href="/Global/category.asp?C=4391" target="_top">More >></a>Region 8 NewsMore>>

  • Hydration station unveiled on A-State campus

    Hydration station unveiled on A-State campus

    Friday, August 17 2018 11:25 PM EDT2018-08-18 03:25:45 GMT
    Maple helps unveil A-State's new hydration station (Source: Arkansas State University)Maple helps unveil A-State's new hydration station (Source: Arkansas State University)
    Maple helps unveil A-State's new hydration station (Source: Arkansas State University)Maple helps unveil A-State's new hydration station (Source: Arkansas State University)

    As part of a campus beautification project, Arkansas State University installed a hydration station.

    As part of a campus beautification project, Arkansas State University installed a hydration station.

  • breaking

    Sheriff: Two teens killed in train versus truck crash in Clay County

    Sheriff: Two teens killed in train versus truck crash in Clay County

    Friday, August 17 2018 6:48 PM EDT2018-08-17 22:48:26 GMT
    Friday, August 17 2018 11:25 PM EDT2018-08-18 03:25:00 GMT

    According to Clay County Sheriff Terry Miller, two teenagers, who were both seniors in high school, are dead after a train versus truck crash near County Road 154 north of Corning. 

    According to Clay County Sheriff Terry Miller, two teenagers, who were both seniors in high school, are dead after a train versus truck crash near County Road 154 north of Corning. 

  • breaking

    Sheriff: Rape, kidnapping suspect released in Greene County

    Sheriff: Rape, kidnapping suspect released in Greene County

    Friday, August 17 2018 10:53 PM EDT2018-08-18 02:53:05 GMT
    Friday, August 17 2018 10:58 PM EDT2018-08-18 02:58:18 GMT
    (Source: Raycom Media)(Source: Raycom Media)

    According to a post on the Greene County Sheriff's Department Facebook, a man arrested earlier this week in connection with a rape in Greene County has been released. 

    According to a post on the Greene County Sheriff's Department Facebook, a man arrested earlier this week in connection with a rape in Greene County has been released. 

Powered by Frankly