Gasoline prices could fall up to 25 cents a gallon in parts of the USA within the next two weeks, thanks to slumping crude oil prices, weakening demand and robust supplies.
Now averaging $3.64 a gallon - vs $3.48 last July -prices could soon drop to $3.50, with some Southern states falling below $3, says Patrick DeHaan, senior petroleum analyst for price tracker gasbuddy.com.
Crude oil prices are down again Wednesday, with benchmark West Texas crude off 84 cents to $102.56 a barrel and Brent crude off 62 cents to $108.32 - a ninth straight daily drop.
"The tipping points were cooling tensions in Iraq and Hurricane Arthur come and being no big deal,'' says DeHaan. "Oil bulls had no where to go, and oil prices are higher than they should be and unjustified at this level."
With Iraqi output still strong and Libya expected to boost exports, supplies are also ample. U.S. output is also surging. Horizontal drilling and hydraulic fracturing has pushed U.S. crude oil production to 8.5 million barrels a day, the most since 1972, according to the Energy Information Administration.
"We continue to produce oil at mult-decade highs and have ample supplies in storage, so that gives the market less of a need to rally prices,'' says Platts oil futures editor Alison Ciaccio. "Futures prices have fallen from highs seen in June, and that translates to lower prices at the pump."
The expected drop in prices is coming nearing two months after gasoline prices typically peak for the year.
California, which was again hampered by refinery woes, should see the biggest price drops. Now averaging $4.13 a gallon, prices could fall 25 cents. That would be below year-ago levels averaging $3.98.
Still, the run up that kept 2014 prices higher and longer than normal could push the year's average above 2013's $3.49, the lowest annual average since 2010.