Gasoline prices might not set any records this summer, thanks to a recent drop in the price of oil.
The government on Tuesday slashed its forecast for the average gas price nationally to $3.79 per gallon for the summer driving season. That’s down from an initial estimate of $3.95 and below the record average of $3.80 in 2008.
Utah average unleaded gas prices
Tuesday » $3.70
Week ago » $3.70
Month ago » $3.72
Year ago » $3.74
Record high » $4.22 on July 18, 2008
Tuesday » $3.76
Week ago » $3.81
Month ago » $3.93
Year ago » $3.97
Record high » $4.11 on July 17, 2008
The Energy Information Administration’s (EIA) revised forecast is encouraging news for the economy. Some economists blame high pump prices for so-so consumer spending this year. Higher costs also were seen as a factor in the loss of 35,000 retail jobs in February and March.
Gasoline prices soared 20 percent from January to early April but have stabilized in recent weeks. In Utah, where despite the rise the state has enjoyed some of the lowest prices in the nation since January, the average is $3.70. Even though that’s down a couple of cents from a month ago, Utah now has the 12th-lowest prices in the nation instead of the fifth-lowest.
Nationally, the average is down 17 cents from a month ago, at $3.76.
Not long ago, a few analysts warned that drivers in some parts of the country could pay as much as $5 this summer, eclipsing the 2008 record of $4.11 per gallon ($4.22 in Utah).
Not anymore. The price of benchmark crude has dropped about $8 per barrel since early April. Retail gas prices have followed.
"It’s almost like a tax cut," said Jared Bernstein, a senior fellow Center for Budget and Policy Priorities. EIA’s prediction means that motorists could spend $10.7 billion less on gasoline than previously anticipated.
Last year, drivers nationally paid an average of $3.71 per gallon from April to September, a period the government considers the peak driving season.
Gasoline might become less of a campaign issue. Republican presidential candidates hammered President Obama as prices jumped this year, even though presidents have little sway over pump prices. If gasoline gets even cheaper, experts think it could get knocked from the top tier of campaign issues.
It’s still a bit of a mixed bag for the president. Part of the reason oil prices have declined during the past month is sluggishness in the U.S. economy, highlighted by a disappointing jobs report last week.
Europe helped sink oil prices, as well. Some European countries are in recession, and election results in France and Greece over the weekend threaten to derail the eurozone’s plan for recovery.
"Global economic concerns have helped to pressure oil prices lower," said Matt Skryja, a spokeman for AAA, the travel services company. "A depressed economy can mean decreased demand for oil and gas."
Oil is down nearly 12 percent since peaking near $110 per barrel in February. As oil prices fall, it becomes cheaper for refineries to make gasoline and other fuels, and some of that savings eventually gets passed along in the form of cheaper pump prices.
The EIA says that gasoline prices nationally should average $3.71 per gallon for all of 2012, down 10 cents from April’s estimate. The EIA’s forecast for next year is $3.67 per gallon.
Lower gasoline prices will allow many drivers to keep a few extra dollars in their pocket every time they fill up. That could encourage more drivers to take their cars out for a drive this summer, but overall demand is expected to be lower than last year.
MasterCard SpendingPulse said Tuesday that average gasoline demand fell 6.1 percent last week in the U.S. Its analysis of credit card purchases shows that American drivers have purchased less gasoline every week for more than a year.
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