Gas, diesel prices drop nationwide
Downward lines on market graphs aren’t always bad. When it comes to fuel prices, they feel downright awesome, at the pump anyway. But savings at the gas station don’t speak well of the economy’s health.
According to the U.S. Energy Information Administration, the national average for both regular gas and on-highway diesel are down from week-to-week and year-to-year levels. This downtrend could be a litmus test for slowing domestic and global economic growth and reduced consumer confidence.
One of the large contributing factors to the declining price of retail fuel has been the declining price of crude oil. The price of crude oil makes up roughly two-thirds of the price of retail fuel. By the end of May, crude oil fell to just above $80 a barrel. Though it jumped back up to $85 a barrel midway through the first week of June, prices are still well below recent highs.
Despite the initial upside to this downtrend—cheaper prices at the pump—Fortune Magazine warns deflated oil and fuel prices signal a weaker U.S. and global economies as well as diminished consumer confidence.
According to Chris Lafakis, energy economist for Moody’s Analytics, every 1 cent decrease in retail gas prices results in roughly $1.2 billion in additional consumer spending in the course of a year. However, current domestic and global financial concerns make any significant spending resurgence questionable.
The national average for the price of regular gas as of June 4 was $3.61 per gallon, down 17 cents from the same week last year, and down 33 cents from this year’s high of $3.94 per gallon at the beginning of April. This is still well above the $3.30 per gallon price of the beginning of the year, but a welcomed trend going into summer.
Most western and central areas have seen this trend as well, though regional variation exists. The Gulf Coast area has enjoyed the most radical decline in fuel prices, going from the early-April high of $3.82 per gallon to $3.37 as of June 4, and down 21 cents from its same-week 2011 price. The Rocky Mountain region, on the other hand, has seen the most restrained price decline. June 4 saw a gallon of regular gas going for $3.73. This is down from its 2012 high of $3.80 per gallon, but is up 4 cents from its 2011 price.
The West Coast (both with and without California) is, of course, the trendbreaker in the consistent downward movement of regular gas prices, with a serious peak in mid-May. Despite this, there has been a downtrend in the past weeks since then. The West Coast and the Rocky Mountain area are the only regions above the national average.
Diesel prices saw similar national and regional price behavior, with the national average for all on-highway diesels as of June 4 being $3.84 per gallon, 10 cents down from the first week in June for 2011. This is also down 31 cents from the April high.
Regionally, the trends have been the same as with regular gas. The West Coast saw the largest yearto-year decrease of just over 4 cents, but is still the most expensive region at $4.10 per gallon. Midwestern diesel is now $3.75 per gallon, the lowest region in the country, and 14 cents lower than last year. Diesel on the Gulf Coast is neck-and-neck for having the cheapest diesel at $3.76 per gallon, down 12 cents from 2011. And as with regular gas, the Rocky Mountain region saw the smallest decrease, 9 cents from 2011, to $3.92 per gallon. — Kerry Halladay, WLJ Editor