Gasoline Prices Drop 22% and May Fall Further

Posted on October 15, 2008 by LCT Staff - Also by this author - About the author

HOUSTON – U.S. gasoline prices have skidded 22% from their highs and may fall further as the economy slows and as refinery operations disrupted by hurricanes return to normal.

A gallon of regular gasoline cost on average $3.206 a gallon on Monday, according to AAA's Fuel Gauge Report. Since hitting a peak of $4.114 on July 17, prices in many places have slid below $3 a gallon. Just a few months ago, before the credit crisis reached fever pitch, talk of $5 - or even $6 gasoline - was bandied about, underscoring how quickly the outlook for fuel prices has changed.

U.S. drivers complained as prices made their way up, as spending on fuel crimped disposable income, but it is unlikely that they will be celebrating with prices on the way down. The global financial crisis and stock-market rout have overtaken pump prices as matters of concern, although the stock market did rebound Monday.

Americans drove 53.2 billion fewer miles from November 2007 to June 2008 - a 4.7% decrease - compared with the same period a year earlier, according to the Federal Highway Administration. Typically, driving increases from year to year. However, a decrease was seen during the energy crisis of the 1970s, though the current decline is much more steep.

Mr. Halloran predicts that prices could go even lower, in part because refineries are still working out the kinks in distribution caused by hurricanes Gustav and Ike. Ike shut down 14 Gulf Coast refineries and Exxon Mobil Corp.'s Beaumont refinery still hasn't restarted.

The September storms disrupted refinery operations and pipeline shipments across the eastern half of the country, causing shortages in the Atlanta and Charlotte areas. Prices were higher than the national average in those areas but the real worry, the regional AAA said, was the lack of gasoline.

As the economic picture has turned worse, so has oil refiners' situation. The gasoline crack spread, or difference between gasoline-futures and crude-futures prices, has been negative, a rarity. With a negative crack spread, refineries are likely to cut rates or be slow to resume after Ike.

However, hurricane-impacted refiners still have to build stocks depleted by the storm, Mr. Halloran said. They need to maintain a minimum level in order to serve costumers and right now they are below that base, he said.

This increase in inventory may lead to cheaper gasoline later this year, Mr. Halloran said.

The federal Energy Information Agency usually reports average retail fuel prices on Mondays, but these data have been delayed due to the Columbus Day holiday.

Source: Wall Street Journal

View comments or post a comment on this story. (0 Comments)

More News

Arkansas Operation Recognized As Small Business of the Year

Pinnacle Car Services, Inc. recieved the accolade from the Greater Bentonville Bella Vista Chamber of Commerce.

How To Make Your Buses Comply With The Latest Rules

eNews Exclusive: Joe Guinn guides operators on the best ways to prepare for the large leap from sedans and SUVs to buses and motorcoaches.

What Is The Future Of The New Luxury Traveler?

There is a growing demand for more human connectedness and meaningful experiences for both adults and children.

DWIs Down In One City Since Uber Launched

Springfield, Mo., saw an average of 47 drunk driving arrests per month down from 55 per month in 2016.

Party Bus Entrepreneur On The Road To Growth

Operator with military experience launched her Mobile, Ala.-area business with a custom-built vehicle.

See More News

Facebook Comments ()

Comments (0)

Post a Comment



See More

LCT Store

LCT Magazine - May 2017 $12.95 Post International LCT Show Issue COVER STORY: * Best Operators of 2017: Their Winning Secrets Revealed * *


Experience the three annual industry events for networking for business, showcasing vehicles and products, and getting the tools for success.

Read About Your Region

What’s Happening Near You?
Click on any state to see the latest industry news and events in that region.

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment



Work Truck Magazine

The number 1 resource for vocational truck fleets

Metro Magazine

Serving the bus and passenger rail industries for more than a century

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

Please sign in or register to .    Close