Current Gasoline Prices Stay Persistently High

When refineries along the Gulf Coast started to close down before Hurricane Isaac struck in the latter parts of August, analysts forecasted the resulting gasoline price increases to be short-lived.

And yet despite these predictions, almost a month after the storm, current gasoline prices remain higher compared to their level prior to Isaac. Even though prices are persistently high, analysts are growing quite confident that they will fall in quarter four of this year.

New York and the West Coast still see the highest levels at the pump as their current gasoline prices are still more than $4 per gallon, said the AAA. The recent national average is $3.81 per gallon.

Moreover, that rate is way higher compared to last month’s $3.75 per gallon gasoline price prior to the striking of Hurricane Isaac at the Gulf.

In Houston, the recent cost of regular gas is $3.58 per gallon, said the AAA. That is lower compared to last week’s rate of $3.64 per gallon but somewhat higher from last month’s $3.55 per gallon.

Others noted that the crude oil price per barrel is lower by almost $10 per barrel since the early parts of September. As a result, drivers are confused. They see the crude oil price per barrel fall but gas prices are falling slower than usual.

Yet its likely that the price of gasoline will significantly fall by November, the time when the largest declines usually occur because refineries switch from summer blend gas to cheaper winter blend fuel.

Whoever is elected in the U.S. election on November 5 can inappropriately take the credit for the drop when it comes.

The fact that gasoline demand has fallen by a measly 1 percent on average compared to the past year is even more surprising than the slow price drop.

It is quite surprising that demand is not as weak as expected in spite of gasoline prices today above $4 per gallon in some parts of the U.S. and with majority of the nation paying at least $3.80 per gallon at the pump.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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