Gasoline Prices Could Drop to $3.20 Per Gallon in 2013, AAA Says

Gasoline Prices Could Drop to $3.20 Per Gallon in 2013, AAA SaysGasoline prices in 2012 will be cheaper than in 2012 because of ramped-up domestic oil production and lower demand, AAA said today.
Following a late-spring peak, prices should drop during the first half of the summer to as low as $3.20-$3.40 per gallon before rising again in advance of the Gulf Coast hurricane season and the switchover to winter-blend gasoline.
The national average price of gasoline should peak at $3.60-$3.80 per gallon, as long as there isn’t any unanticipated event that would affect crude oil prices in world markets.
That compares to a peak of $3.94 a gallon in 2012.
Today’s national average price of gasoline is $3.30 per gallon, which is seven cents less than last year and five cents less than a month ago.
The annual average price of gasoline in 2012 was the most expensive on record at $3.60 per gallon, but prices are already improving.
On Jan. 5, the national daily average dropped below the year-ago price for the first time since August 20, which means motorists are now paying less for gasoline than last year – a trend that AAA believes is likely to continue.
However, when it comes to gas price projections, much rides on the state of the U.S. economy. A stronger recovery could hike prices as markets anticipate stronger demand.
“Absent significant storms, majors 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,” said AAA President and CEO Robert Darbelnet. “Stronger than expected growth in the economy would result in higher oil and gasoline prices in anticipation of higher consumption, while a weaker than expected economy would drive prices downwards.”
But there will be seasonal increases during the first half of the year. Gas prices should rise steadily through April or early May, but at a slower pace than last year. Prices normally rise from seasonal demand and in anticipation of the switchover to more expensive summer-blend gasoline.
Prices should end the year by falling to low or near-low averages for 2013.
“Cheaper gas prices are good news for the millions of Americans that depend on their car to travel where they need to go,” Darbelnet said. “Lower gasoline prices should translate into billions of dollars in tangible household savings given that the vast majority of Americans rely on automobiles to live their lives.”
Gasoline prices in 2012 reached record highs partly as a result of unanticipated production disruptions from refinery fires, pipeline closures and major hurricanes. Oil prices also were higher as a result of tensions in the Middle East including new sanctions on Iran.

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