NEW YORK -- In this highly charged political season, people's thoughts naturally turn to red states and blue states. But a look at website GasBuddy.com's active map of retail gasoline prices reveals a red, orange, yellow and green patchwork color scheme, with a green $3 swath cutting through the U.S. Plains and parts of the Midwest. And with a national average of about $3.50 per gallon, numerous media reports nationwide confirm a dip even below $3.
Oil prices closed down Wednesday after touching their lowest level this year, reported [image-nocss] the Associated Press, pressured by a huge jump in U.S. crude inventories and more signs of dwindling demand. Light, sweet crude for November delivery fell $1.11 to settle at $88.95 on the New York Mercantile Exchange. Oil at one point fell to $86.05, the lowest price since Dec. 6, 2007. Crude has now fallen about 40% since surging to an all-time record $147.27 a barrel on July 11.
Meanwhile, a gallon of regular gasoline fell about three cents overnight to a new national average of $3.447 a gallon Wednesday, according to auto club AAA, the Oil Price Information Service and Wright Express. That is 16% lower than the record average of $4.114 set July 17, but well above the year-ago average of $2.765 a gallon. Still, should oil keep sliding, analysts said pump prices could fall back below $3 a gallon sometime next month.
AAA believes that current conditions will spur the national average close to or below $3 per gallon this fall. The national average, which has fallen more than 20 cents in a month, should actually be lower than it is, but remains artificially inflated due to serious supply shortages in parts of several southeastern states, the result of Gulf of Mexico hurricanes, it said.
According to AAA, the five states with the most expensive gasoline are Alaska, $4.16; Hawaii, $4.13; North Carolina, $3.77; Georgia, $3.73; and South Carolina, $3.63. The cheapest are Oklahoma, $3.05; Kansas, $3.10; Missouri, $3.11; Iowa, $3.17; and New Jersey, $3.18.
The average price for regular gasoline in the United States plunged 14.8 cents to slip below $3.50 for the first time since April 14, said the federal Energy Information Administration (EIA) in its "This Week in Petroleum" on Wednesday. Prices have now fallen for three weeks in a row, bringing the average to 348.4 cents per gallon, 71.4 cents above a year ago. The price on the East Coast fell 12 cents to 354.4 cents per gallon. The largest drop occurred in the Midwest, where the average price plummeted 21.6 cents. At 339.3 cents per gallon, the price was the lowest among the major regions. The price on the Gulf Coast tumbled 16.4 cents to 343.6 cents per gallon. The price in the Rocky Mountains was down for the 11th consecutive week, slipping 10.4 cents to 349.6 cents per gallon. Dropping for the 15th consecutive week, the price on the West Coast fell another 7.4 cents to hit 356.8 cents per gallon. The price in California shrank 6.9 cents to 360.1 cents per gallon.
Regular-grade gasoline prices are projected to average $3.56 per gallon in both 2008 and 2009, according to the EIA's "Short-Term Energy & Winter Fuels Outlook," following movements in projected crude oil prices. Because of the continued weakness in motor gasoline consumption, the difference between the price of gasoline and the cost of crude is expected to remain low throughout the forecast interval.
Motor gasoline inventories during the summer were tight and became even tighter as a result of Hurricanes Gustav and Ike. On September 30, total gasoline inventories were estimated at 180 million barrels, 23 million barrels below the five-year average and the lowest since August 1967. Continued weakness in motor gasoline markets and growth in domestic fuel ethanol production are expected to allow inventories to recover. By the beginning of the second quarter next year, total gasoline inventories are expected to reach 205 million barrels, about four million barrels below the previous five-year average.
The U.S. average diesel price dropped 8.4 cents to 387.5 cents per gallon, reported "This Week in Petroleum." Prices settled below the $4 mark in all major regions of the country for the first time since March 10. The price on the East Coast fell 9.2 cents to 392.8 cents per gallon, although it is still 89.7 cents higher than last year. Dropping 7.8 cents, the price in the Midwest fell to 385.8 cents per gallon. The average price in the Gulf Coast dipped 8.6 cents to 384.3 cents per gallon, remaining the lowest of any region. The price in the Rocky Mountains decreased 5.8 cents to 388.6 cents per gallon. The average price on the West Coast declined 9.4 cents to 384.7 cents per gallon. In California, the average also moved down by 9.4 cents to 386.9 cents per gallon.
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