AAA: Gas Price Decline Seems to Have Ended

The consecutive decline in gasoline prices seems to have stopped, at least for the summer’s remainder. The current gas prices reflect an increase for the third straight week this month, reversing May and June’s 58-cent drop, and gaining 12 cents since the start of July. Recent gas prices reached an average of $3.45, its highest in four weeks and a 6-cent gain compared to the previous week, but a 4-cent and 23-cent fall from last month and last year, respectively.

The current gas price increases also happened last summer when prices declined by 44 cents from its highest rate of $3.98 per gallon in May to its lowest price for the summer of $3.54 when June ended. In the past year, prices grew by 17 cents in the month of July and stayed high until Labor Day before falling after the busy driving season in the summer. The highest-ever price of retail gas of $4.11 a gallon occurred four years ago last week, on July 17, 2008.

Although the larger concerns on the global economy and demand worries that pushed spring’s oil prices significantly lower still remain, prices are now up due to supply concerns together with better-than-anticipated news on the global economy.

The most significant threat to the current oil supply comes from the Middle East as world powers seek to pressure Iran to stop its alleged nuclear program. The tension increased following a bombing in Bulgaria that killed Israeli tourists which Israel blames on Iran. Analysts warned that worries about Middle Eastern oil supplies are not yet over, and those concerns will restrict any further decline on oil prices.

Oil has increased over 17% since touching its lowest level in the past month mainly because of strengthened worries about the possible conflict between Iran and several Western nations over the former’s disputed nuclear program. Oil prices recently ended its seven-day consecutive gains because of profit sharing and a stronger dollar, although the per barrel crude price stayed over $90. The price of crude in the most recent trading was $91.83 per barrel, marking a gain for the third week in a four-week period, this time of over 5%.

The wildly volatile gasoline prices in 2012 are anticipated to move downward in the fall season. One analyst expects gasoline prices to move within the range of $3.30 to $3.50 a gallon from now until Labor Day. In the coming year, the EIA estimates current gas prices to fall to an average of around $3.28 a gallon because of poor demand and possible drop in the per barrel crude price.