Gasoline prices fell again on August 19, with the national average falling to $3.89 a gallon, while crude oil prices edged up to $91.56 a barrel.
The most common price is $3.49 a gallon, Patrick De Haan, director of petroleum analysis at GasBuddy, the Boston-based provider of retail fuel price information, told TheStreet. The cheapest 10% of gas stations sell gasoline for an average of $3.22 per gallon, and the median price is now $3.72 per gallon. Diesel costs $4,996 per gallon.
Consumers got a slight respite from higher gasoline prices over the past two months, although inflation in energy, housing and food costs has eroded wage earnings.
“Americans will spend $430 million less on gas today than they did in mid-June,” he said.
Motorists should not expect falling gas prices for more than a few weeks.
“I think we’re in the last phase of the decline for now,” said De Haan. “We could stabilize at just under $4 a gallon for now, but there’s a lot of economic data that could nudge us one way or another.”
Some regions in the US could see further price cuts, like the West Coast, as their declines were smaller compared to the South and Midwest, he said.
Peak fuel demand ends
The peak in gasoline demand has ended, said De Haan. The amount of gasoline sold has decreased every day this week except Thursday compared to a week ago.
Gasoline prices are down from their June 14 peak of $5.03. They are down more than $1 a gallon reflecting the decline and volatility in crude oil prices.
On August 4, crude oil prices fell to their lowest level since Russia invaded Ukraine in late February. West Texas Intermediate hit $88 a barrel while the international benchmark, Brent crude, fell to $95 a barrel.
Crude oil prices were volatile as news of China’s weaker economic growth sent WTI lower earlier this week.
Economic data such as lower inflation could actually boost consumer confidence and lead to higher demand for gasoline.
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“In addition, positive economic data could bring optimism and lead to an increase in demand, while bad economic data could lead to the opposite,” said De Haan.
Gasoline prices fall in autumn
Gasoline prices fall in the autumn months because demand falls, consumers tend to drive less and winter gasoline is cheaper to produce.
Gasoline prices are past their summer highs and refineries will start producing gasoline specified for the winter months. These formulations are easier to manufacture and cost less because of the products used to blend crude oil, Richard Joswick, head of global oil analysis at S&P Global Commodity Insights, told TheStreet. He expects Brent crude prices “to hit below $100 before the end of the year.”
Refineries will switch to producing cheaper winter gasoline by mid-September, De Haan said.
“Demand is cooling and motorists have less appeal to get outside as temperatures drop,” he said.
Midterm or presidential elections are not correlated with gas prices, and there is no “conspiracy,” De Haan said.
Hurricane season could affect prices
The peak hurricane season is upon us, beginning towards the end of August, which could impact production and refining capacity.
A major storm “could disrupt Gulf oil production and refineries in the region should a major hurricane head for the area,” De Haan said.
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A major hurricane making landfall along the Gulf Coast could push oil prices up $10 and gas prices up $0.25 a gallon, said Rob Thummel, senior portfolio manager at Tortoise in Overland Park. Kan., opposite TheStreet.
A refinery outage could push gasoline prices back into the mid-$4 range, he said.
Colorado State University is forecasting an active hurricane season, estimating 18 named storms, eight Category 3 or higher hurricanes, and four major hurricanes.