Cheapest gasoline since March greets US memorial day drivers
Sunday, 30 May 2010
NEW YORK, May 30 (Bloomberg): Gasoline prices will be at the lowest level since March as US drivers take to the highways this Memorial Day weekend, the traditional start of the summer driving season in the world's largest energy-consuming country.
Pump prices have dropped for three weeks to an average $2.749 a gallon for regular gasoline, as of May 26, as crude oil prices collapsed, according to AAA, the nation's biggest motoring organization. Consumers will be paying 12 per cent more than a year ago, though prices are 30 per cent less than in 2008, the year crude oil rose to a record $147 a barrel.
About 28 million people will be on road trips during the holiday, a jump of 5.8 per cent from a year earlier and the first increase since 2005, according to AAA, which calculates the period over five days, from yesterday through Monday.
"We look forward to this weekend," said Bill Compitello, senior director of petroleum supply at Wawa, Pennsylvania-based Wawa Inc., a gasoline retailer with 272 outlets in five states from New Jersey to Virginia. "The last few seasons people have been staying closer to home."
Confidence among US consumers increased in May to the highest level since March 2008 as Americans became more upbeat about job prospects. The Conference Board's confidence index rose to 63.3, exceeding the highest estimate in a Bloomberg News survey, from a revised 57.7 in April, figures from the New York- based private research group showed.
"We're expecting there to be a noticeable increase" in fuel demand beginning this weekend, said John Gamel, director of economic analysis for MasterCard Advisors, which publishes its SpendingPulse report on retail gasoline sales each week. "We have all the ingredients from a price perspective and some good news from the consumer confidence level, which all bodes well for the summer driving season."
Gasoline futures on the New York Mercantile Exchange have fallen 16 per cent since May 3, while crude oil is down 13 per cent. Crude accounts for about 69 per cent of what motorists pay at the pump, according to the Energy Department.
Prices may tumble further if more fuel cargoes arrive from Europe and Venezuela, adding to supply. Gasoline imports rose to 1.1 million barrels a day for the week ended May 21, a 10 per cent increase from a year earlier, according to the Energy Department. "If those cargoes materialize, they will add to supply and pressure the New York Harbor market," he said.
Gasoline inventories were 221.6 million barrels last week, 5.8 per cent above the 5-year average, according to the department.
Inventories of the fuel are high and profit margins for refiners are "decent, so you can expect increased output," said Phil Flynn, vice president of research at PFGBest in Chicago. "After the Memorial Day weekend, prices should come under pressure."
The Energy Department predicted in a May 11 report that gasoline prices will average $2.94 a gallon from April through September, assuming average crude oil prices of $83.16 a barrel for the period. Crude oil has averaged $79.49 since April 1.
"If you asked us for our projection of summer gasoline prices next month, I know it will be lower than what we published in the May outlook," Howard Gruenspecht, EIA's deputy administrator, said in Washington on May 25. "You might drop 25 cents a gallon off of that price," he said.
Trilby Lundberg, an independent gasoline analyst in Camarillo, California, said she had expected to fall another 5 to 10 cents from current levels until crude oil rebounded 8.4 per cent the past two days.
"With today's higher crude oil price, however, more than half the downward pressure on retail gasoline is effectively canceled," she said.
Pump prices have dropped for three weeks to an average $2.749 a gallon for regular gasoline, as of May 26, as crude oil prices collapsed, according to AAA, the nation's biggest motoring organization. Consumers will be paying 12 per cent more than a year ago, though prices are 30 per cent less than in 2008, the year crude oil rose to a record $147 a barrel.
About 28 million people will be on road trips during the holiday, a jump of 5.8 per cent from a year earlier and the first increase since 2005, according to AAA, which calculates the period over five days, from yesterday through Monday.
"We look forward to this weekend," said Bill Compitello, senior director of petroleum supply at Wawa, Pennsylvania-based Wawa Inc., a gasoline retailer with 272 outlets in five states from New Jersey to Virginia. "The last few seasons people have been staying closer to home."
Confidence among US consumers increased in May to the highest level since March 2008 as Americans became more upbeat about job prospects. The Conference Board's confidence index rose to 63.3, exceeding the highest estimate in a Bloomberg News survey, from a revised 57.7 in April, figures from the New York- based private research group showed.
"We're expecting there to be a noticeable increase" in fuel demand beginning this weekend, said John Gamel, director of economic analysis for MasterCard Advisors, which publishes its SpendingPulse report on retail gasoline sales each week. "We have all the ingredients from a price perspective and some good news from the consumer confidence level, which all bodes well for the summer driving season."
Gasoline futures on the New York Mercantile Exchange have fallen 16 per cent since May 3, while crude oil is down 13 per cent. Crude accounts for about 69 per cent of what motorists pay at the pump, according to the Energy Department.
Prices may tumble further if more fuel cargoes arrive from Europe and Venezuela, adding to supply. Gasoline imports rose to 1.1 million barrels a day for the week ended May 21, a 10 per cent increase from a year earlier, according to the Energy Department. "If those cargoes materialize, they will add to supply and pressure the New York Harbor market," he said.
Gasoline inventories were 221.6 million barrels last week, 5.8 per cent above the 5-year average, according to the department.
Inventories of the fuel are high and profit margins for refiners are "decent, so you can expect increased output," said Phil Flynn, vice president of research at PFGBest in Chicago. "After the Memorial Day weekend, prices should come under pressure."
The Energy Department predicted in a May 11 report that gasoline prices will average $2.94 a gallon from April through September, assuming average crude oil prices of $83.16 a barrel for the period. Crude oil has averaged $79.49 since April 1.
"If you asked us for our projection of summer gasoline prices next month, I know it will be lower than what we published in the May outlook," Howard Gruenspecht, EIA's deputy administrator, said in Washington on May 25. "You might drop 25 cents a gallon off of that price," he said.
Trilby Lundberg, an independent gasoline analyst in Camarillo, California, said she had expected to fall another 5 to 10 cents from current levels until crude oil rebounded 8.4 per cent the past two days.
"With today's higher crude oil price, however, more than half the downward pressure on retail gasoline is effectively canceled," she said.