After spike, gasoline prices appear headed downward
Although falling gasoline prices in Utah are not keeping pace with the decline nationally, they are down 8 cents in the past month and could drop a little more by early November and in coming weeks.
The national average retail price has fallen for 10 straight days and is at $3.72 per gallon. This could mark the beginning of the usual autumn decrease that was delayed this year because of refinery problems and high oil prices.
In Utah, the average costs of a gallon of unleaded regular gasoline was $3.75 Friday, according to AAA Utah, the travel services company. In many stations in Salt Lake City, though, drivers were able to fill up for $3.60 a gallon or less.
AAA spokeswowman Rolayne Fairclough noted that even though prices were up a penny from Thursday and unchanged from last week, "we should be seeing a steady downward trend, at least for a while, as the winter blends [of gasoline] come online at the end of October."
Tom Kloza, chief oil analyst at the Oil Price Information Service, predicted that nationally prices could drop 5 cents to 15 cents per week for the next three weeks. Over the next several weeks the national average could be at or below where it was last year, at around $3.50.
"There's some nice relief coming," he said.
Gasoline prices typically decline in the fall as refiners switch to cheaper fuel blends and drivers take a break from road trips. This year a series of refinery and pipeline problems sent gasoline supplies plummeting. That sent wholesale gasoline buyers and traders scrambling to purchase whatever they could, at ever higher prices, to secure supply.
"It was a cluster of random coincidental events and the buying had a panic nature to it," Kloza said.
Fairclough said that prices in Utah, which had been below or at the national average for much of the summer, have been rising to the point that the state is in the second-highest tier of states today.
But as driving habits change with fewer long trips and demand for fuel goes down, she expects a price drop similar to what will be happening nationally.
Fuel shortages in some parts of the country in recent weeks came as gasoline prices were already steep they were on track to set an annual record by mid-summer. That was because of relatively high global crude oil prices, with Brent, the type of crude most important in determining the price of gasoline, averaging $112 per barrel this year. Global oil demand is on track to set a record this year despite economic uncertainty. And the standoff over Iran's nuclear program has raised fears that oil supplies could be disrupted if tensions escalate.
Against that backdrop, the nation's gasoline infrastructure got slammed.
In August, ruptures to pipelines that serve the Great Lakes and refinery outages in Indiana and Illinois sent gasoline prices higher in the Midwest. Then a fire at a Chevron refinery in Richmond, Calif., crippled a major contributor to California's gasoline supplies. There also were disruptions at several Gulf Coast refineries.
The national average price kept rising after Labor Day, when prices normally start to fall. It topped out for the season at $3.87 on Sept. 14, and California prices hit a record $4.67 per gallon on Oct. 7. On the East Coast, gasoline supplies dipped to a four-year low, keeping prices stubbornly high.
Then finally the market began to stabilize. The government reported Wednesday that gasoline supplies are heading back up. They had fallen for 10 of the last 11 weeks.
That led to a dramatic drop in wholesale gasoline prices in regional spot markets, according to Kloza, that will soon translate into lower prices at the pump.
California spot prices are down 30 percent over two weeks. Prices elsewhere in the country have declined 15 percent and 27 percent.
Gas prices in Utah
Friday • $3.75
Week ago • $3.75
Month ago • $3.83
Year ago • $3.54
Record high • $4.22 (July 18, 2008)
Friday • $3.72
Week ago • $3.81
Month ago • $3.85
Year ago • $3.47
Record high • $4.11 (July 17, 2008)
Find low-priced gasoline
O Go to UtahGasPrices.com or SaltLakeGasPrices.com