U.S. Average Pump Price Falls to Lowest Level Since 2011Eliot Caroom
Americans are paying the least to fill their cars in almost two years as refiners process the most crude in a decade, offering some relief to nervous consumers.
The national average retail price sank 1.1 cents to $3.211 a gallon, the lowest since Dec. 20, 2011, AAA, the nation’s largest motoring club, said on its website today. Pump prices are approaching the lowest level since February 2011, just before unrest in the Middle East pushed U.S. crude oil above $100 a barrel and gasoline near $4 a gallon.
“We’re probably just a few days away from seeing the cheapest gas prices since February 2011,” Michael Green, a AAA spokesman in Washington, said by telephone. “Our official estimate would still be that we’re going to drop to $3.10 a gallon by the end of the year. At the rate we’re going, it wouldn’t be surprising if we even go a little lower.”
U.S. refiners are processing the most crude and other feedstock for this time of year since 2003, having expanded to take advantage of surging domestic and Canadian supply. U.S. oil production grew in October to the highest level since March 1989 as advances in drilling techniques boosted output from shale formations. The Bloomberg Consumer Comfort Index declined to minus 37.9 in the week ended Nov. 3, the worst reading since October 2012, from minus 37.6 the previous week.
If prices fall to AAA’s year-end target, that 11-cent drop will save the average driver about $1.24 each week, or $64.31 annually, according to data from Michael Sivak of the University of Michigan’s Transportation Research Institute.
Retail prices have fallen 38.3 cents since August, with the 2013 Atlantic hurricane season that ends Nov. 30 shaping up to be the first in almost two decades without a major storm disrupting Gulf Coast crude and fuel production.
West Texas Intermediate crude prices on the New York Mercantile Exchange have fallen 12 percent and gasoline futures on the Nymex have dropped 16 percent since August.
“The ongoing purge that we are seeing in prices at the pump is of course reflective of what we’re seeing in the wholesale markets, and we’ve had a nice pullback on crude oil prices,” Stephen Schork, the president of Schork Group Inc. in Villanova, Pennsylvania, said by phone. “We’re now kind of at the nadir of demand.”
Crude traded in New York jumped 35 percent to $113.93 a barrel April 29, 2011, from $84.32 on Feb. 15 of that year on concern unrest in Libya would spread and reduce supply from the Middle East. Pump prices surged 85.2 cents to $3.985 a gallon in early May 2011 from $3.133 in February.
About 19 percent of gas stations were charging less than $3 a gallon yesterday, with only 2 percent selling regular for more than $3.75, according to AAA’s Green. Drivers in 38 states had access to at least one station selling the fuel for below $3.
“There hasn’t been a major hurricane disruption, refineries have run smoothly and there’s more refining capacity in North America,” Green said. “We’re also looking at a time when you generally see declining demand, a drop in the cost of oil and a switch to less-expensive winter blend gasoline.”