Prices at the pump just keep dropping.
The average US gas price is now $3.52 per gallon, according to a Thursday report released by automotive group AAA, making current prices the lowest since March of this year. This July, US consumers saw a bigger drop in gas prices than in any July over the last six years. The price at the pump fell every day but one over the course of the month, according to AAA.
Gas prices generally rise in the summer months, as Americans hit the road and drive up demand for gas. The federal government also mandates that refineries produce a more costly, lower-emission blend of gas in the summer – and those increased costs are passed onto motorists.
Not so this year. A burgeoning supply of domestic crude oil is holding down gas prices at home, even as international tensions grip Russia and Ukraine, Israel and Gaza, and parts of Iraq. But shockwaves from international conflicts – Iraq in particular – hit markets hardest earlier this summer, and crude prices are normalizing as situations in oil-producing Iraq and Libya have yet to significantly disrupt output.
“The fighting in those regions has kept the price of oil high, but most of that effect happened in previous months,” AAA spokesman Michael Green says in a telephone interview Thursday. “Over the past month or so, we haven’t seen any situations where actual oil production or exports have been affected.”
Gas prices fell 16 cents in July, according to AAA’s monthly report. That’s a contrast to previous years, when gas prices have ticked up throughout the month. Over the last three years, gas prices increased by an average of 16 cents per gallon during the month of July.
And though forecasters expected that expanded domestic oil production would translate into good prices for consumers, they couldn’t have predicted prices quite this low.
“We expected prices maybe not to rise, but to remain flat [this summer],” Mr. Green says.
But in mid-July US gas prices hit a 100-day low, and from there prices have fallen even further.
And all this despite the fact that demand for gas this summer has been comparable to previous years, according to Energy Information Agency data. At the end of this month, 8.9 million gallons of finished gas reached US motorists each day, according to the EIA, compared to around 9 million last July and the July before.
Refineries are also churning out gas near peak capacity, which helps keep gas prices low, according to Gregg Laskoski, a senior petroleum analyst at GasBuddy, a Website that tracks gas prices nationally.
“We’re seeing very strong numbers from all the refineries,” Mr. Laskoski says in a telephone interview Thursday. Gulf Coast refiners have been operating around 95 percent capacity over the last four weeks, he adds.
“That’s a very positive sign for consumers,” Laskoski says.