Gas Prices Still Predicted to Drop in November Following Hurricane Sandy
WASHINGTON – AAA released a couple of reports this week, the first being its weekly price update and the second an update on the near-term outlook for fuel prices, both of which noted the effect hurricane Sandy will likely have on fuel prices.
The organization stated that two out of six refineries in the northeast, which produce more than 300,000 barrels per day, announced temporary closures, along with many of the oil terminals in the area, before the hurricane hit. In addition, the other four refineries in the area were expected to operate at reduced production levels during the storm.
Although with this loss in production one would think prices would go up, AAA stated that the northeast is a major consumer of gasoline, not a major producer. This being the case, AAA predicts gas prices will likely follow the downward trajectory they’re been following due to a significant drop in demand for fuel in storm-hit areas. AAA noted that not only has ground traffic been disrupted by the storm, with tens of millions of motorists having stayed home during Sandy, around 9,000 flights were canceled.
In addition, the company stated the usual demand at this time of year is near 8.5 million barrels per day, and in the days following the storm, demand could have dropped by as much as 1 million barrels per day.
With that in mind, AAA predicts the national average price of gasoline will land between $3.40 and 3.50 per gallon by Election Day, and around $3.25 to 3.40 per gallon by Thanksgiving.
The national average price of gasoline dropped 26.2 cents per gallon in October, with the price having fallen for the past 21 straight days, the longest period of consecutive decline since June. Even in California, which saw the average price hit an all-time high of $4.671 per gallon on Oct. 9, prices have fallen a total of 59.6 cents per gallon.
The national average retail price of gasoline is $3.507 per gallon as of Nov. 1, which is nine cents less than last week but seven cents more than it was a year ago. The five states with the highest prices include Hawaii, at $4.32; Alaska at $4.21; Calif., at $4.08, N.Y., at $3.93, and Conn., at $3.89.
That said, news reports are noting that in areas hit by the storm, fuel shortages are causing problems, for example rationing and price gouging.
The five states with the lowest prices include Mo., at $3.15; S.C., at $3.20; Okla., at $3.23; Tenn., at $3.28, and Minn., at $3.30.