WASHINGTON – After a steep decline in gasoline prices from earlier in the year, the decline appears to have stopped, according to AAA.
After declining for 75 out of 77 days straight, gasoline prices have risen every day for a week (as of July 9). Also, as of Monday, this is the first time since early April that the national average retail gasoline price was more expensive than it was the week before. The national average is 5 cents higher than its price a week ago, but is still 17 cents less than it was a month ago, 24 cents less than a year ago, and 56 cents less than the year-to-date peak price of $3.94 in early April.
AAA noted that this reversal in the price trend is not unique. Gasoline prices dropped for 52 out of 56 days in 2011, dropping 44 cents from a high of $3.98 on May 5 of that year to a low in the summer of $3.54 on June 30 last year. In July 2011, however, prices went up 17 cents and remained high through Labor Day. Then from Sept. 6 through Dec. 21, 2011, the national retail average gasoline price fell 46 cents to $3.21 per gallon. The lowest price-to-date for the summer of 2012 was $3.33, on July 2, and the current average is 5 cents above that low price.
On a regional basis, 33 states (and D.C.) saw price increases last week, but prices have gone up most in the Midwest. Average prices went up 10 cents, with Michigan up by 12 cents; Illinois by 14 cents; and Kentucky by 16 cents. In Indiana and Ohio saw even higher price increases, at 26 cents. These states had the largest decline during the last few months, though, according to AAA.
What’s going on besides the seasonal change? Supply concerns are appearing again, AAA stated, despite negative economic news in Europe, a slowing economy in China, and a generally slow U.S. economy. The price of a barrel of West Texas Intermediate (WTI) oil settled at $87.66 last Tuesday, driven in part by new tensions with Iran, which announced a plan to close the Strait of Hormuz (a major oil shipping route). In addition, strikes at a plant in Norway, which produces 1.2 million barrels of crude oil per day, affected supply. Global oil supplies are tighter overall due to sanctions on Iran, and AAA said it expects future supply disruptions would increase pressure on oil prices.