Nov. 08–CLEVELAND, Ohio — The average price of a gallon of gasoline is now steadily falling across the nation after week-to-week price fluctuations earlier in the fall because of unusual demand and unsteady oil prices.
This time analysts think the price at the pumps will continue a slow tumble into the depths of winter, as low as $1.99 a gallon in some places, just when most consumers aren’t planning to drive anywhere other than to work.
The one exception to that stay-at-home behavior is Thanksgiving weekend, and the AAA is forecasting that more than 54 million people will travel during the holiday, the highest projected number since 2005. Most holiday travelers, over 48 million, will be driving.
As of early Thursday, the average price per gallon in Greater Cleveland was $2.51, down from $2.57 a week earlier and $2.82 a month ago, according to statistics from GasBuddy, the Internet-based price watchdog that relies in part on motorists for price reports.
GasBuddy found that Individual station prices in Greater Cleveland ranged from $2.23 a gallon to as high as $2.79, with many stations in the $2.40-range.
GasBuddy calculated the average statewide price at $2.47 and the national average price at $2.76 a gallon.
The AAA pegged the Greater Cleveland average price at $2.51, Akron-area prices at $2.43, the Ohio average price at $2.47 and the national average price hovering between $2.73 and $2.74, based on day-before credit card sales.
In fact, the AAA noted in a report earlier this week that the national average price at the pumps is now about as low as it was last spring before the annual run-up in the weeks before Memorial Day.
The underlying reasons for gasoline price fluctuations include consumer demand, which typically slows after Labor Day but this year did not, industry stockpiles, refinery output, and the price of oil, which in turn depends on oil production, both foreign and domestic.
Oil prices have spent the past three months on a roller coaster, reflecting the actions of market speculators on some occasions, geopolitical events including the actions of the Trump administration on other occasions and conflicting reports from OPEC that the cartel and Russia would or would not cut production.
But the largest single driver has been the significant and unexpected increase in U.S. crude production, driving down oil prices, giving OPEC a global-sized headache and fattening profits for U.S. refiners and corporate filling station owners.
The latest wire reports about OPEC’s plans have suggested both scenarios — that OPEC has already increased production to keep prices stable but would soon cut production to keep prices from cratering.
Current policies, which were set last summer, have called for increased output to keep prices from skyrocketing as Venezuelan production tumbled and the Trump administration threatened U.S. sanctions on nations importing Iranian oil. Since then the administration issued waivers to some nations, including China.
U.S. crude production has meanwhile begun setting monthly records. Most of that record has come from companies drilling for oil in shale rock deep under Texas, Oklahoma and North Dakota but also from deep water oil rigs setting records in the Gulf of Mexico.
The U.S. Energy Information Administration last week reported that U.S. crude production hit 11.3 million barrels a day in August, the most ever, making the United States the top oil producer in the world. Of that total, Gulf of Mexico offshore rigs produced a record of 1.9 million barrels a day.
And earlier this week, the EIA’s Short Term Energy Outlook for November reported that total U.S. crude oil production averaged 11.4 million barrels per day in October and will average 12.1 million barrels a day throughout 2019.
The upturn in production has, for now at least, driven down oil prices, and with them gasoline prices.
The EIA is now forecasting the national average price of gasoline in December will fall to $2.57 a gallon and that the national average price in 2019 will be $2.75 a gallon, down from its October forecast that gasoline prices would average $2.85 a gallon next year.
So what could go wrong?
Here are three reasons to worry:
–OPEC could reach a new deal with its members and Russia to drastically cut production early next year to offset the new and likely permanent surge in U.S. production, forcing oil prices to increase.
–The Trump administration could double down its policy of U.S. sanctions against nations importing Iranian oil by withdrawing waivers it issued earlier in the fall, leading to oil price increases as Iranian crude is off the table and forced into the black market.
–The U.S. demand and global demand for gasoline and other fuels could surge beyond current pessimistic expectations because global economic growth somehow gets back on track, leading to price increases as new demand begins to outstrip supply.
As of this week, the EIA is expecting the price of the best grade of U.S. oil to average just under $65 a barrel in 2019 and the price of the best European grades of oil to average just under $72 a barrel. Yes, oil is a global market, and U.S. producers export as well as import both oil and refined products.
The December contract price Wednesday for the best grade of U.S. oil, which most U.S. refineries no longer must use, closed on the New York Mercantile Exchange at $61.65 a barrel, down $3.66 from the closing price a week earlier on Oct. 31. December contracts were down by about 50 cents on the NYMEX in Thursday morning trading.
Over the past three months, the daily closing contract price of the best grade of U.S. oil has ranged from a low of $65.31 a barrel to a high of $76.41, EIA statistics show.
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