Gas Prices Falling Due to Slowing U.S., European Economies and Easing Tensions With Iran

WASHINGTON - After the average gas price climbed 48 cents between Feb. 1 and March 31, 2012 it’s since fallen rapidly, with prices falling 23 out of 30 days during the month of April, according to AAA. A new report from the organization cites two major factors driving retail gasoline prices down, slowing economies in the U.S. and Europe (partially due to Spain’s economic problems, for example the recent downgrade of Spain’s credit rating), and easing tensions with Iran over its nuclear program. For example, analysts said the cost of a barrel of oil had been higher due to a $20 to $30 “risk premium” (per barrel) from a possible supply disruption.

The current average price for a gallon of regular gasoline is $3.82, which is 4 cents less than the price during the same time a year ago. This price is 11 cents cheaper than on March 30, 2011. As of April 30, 40 U.S. states (plus DC) have an average price at the pump lower than the price was the same day last year.

AAA’s average retail gasoline price on a state-by-state basis showed less of a spread between prices on a regional basis than earlier this year. For example, the lowest price (as of April 30) was in Oklahoma, at $3.545 per gallon, whereas the highest price was in California, at $4.163 per gallon.

Although gas prices have fallen for the time being, the U.S. Energy Information Administration (EIA) expects prices to increase somewhat as the summer driving season begins. The EIA is forecasting regular retail gasoline prices at an average of $3.95 per gallon from April through September.

By Greg Basich