Gasoline pump prices in the U.S. will peak at a lower level this year as oil production increases and demand declines, AAA said.
Prices may reach $3.60 to $3.80 a gallon in 2013, after topping out at $3.936 last year on April 4, AAA Chief Executive Officer Robert Darbelnet forecast today. The 2012 average price was a record $3.60 a gallon, according to data from the largest U.S. motoring organization.
U.S. oil production will increase to 7.32 million barrels a day this year, the most since 1991, the Energy Department projected today. West Texas Intermediate crude prices will fall 4.9 percent this year to $89.54 a barrel, according to the department’s Short-Term Energy Outlook. Gasoline prices will sink 5.2 percent to $3.44 while demand is unchanged at 8.73 million barrels a day, the department said.
Costs will be lower this year as “a result of increased domestic oil production and lower demand,” Darbelnet said in an e-mailed statement today. “Absent significant storms, major wars or production and distribution outages, the single largest factor that will influence gasoline prices in 2013 will be the strength of the U.S. economy.”
The average price for a gallon of regular gasoline is $3.30, 7 cents below a year ago and 5 cents less than a month ago, AAA said in the statement. Motorists in 39 states are paying lower prices than a year ago, according to AAA.
The U.S. labor and housing markets are showing signs of strengthening. The U.S. jobless rate held steady at 7.8 percent in December, matching a four-year low, according to Labor Department figures. Sales of existing homes jumped 5.9% in November while prices continued to rise, the National Association of Realtors said Dec. 20.
Congress approved a budget deal on Jan. 2 that averted spending cuts and higher taxes for most Americans that threatened the U.S. economic recovery. A confrontation is looming between President Barack Obama and congressional Republicans over raising the $16.4 trillion federal debt limit.
Republicans are demanding spending cuts in exchange for raising the limit while Obama says he will not negotiate the issue. Standard & Poor’s lowered the U.S. credit rating in August 2011 after months of debate over whether to raise the limit.