July 17, 2008 still reigns as the date for the highest recorded gas prices around the country, with regular gasoline priced on average at $4.11 per gallon. Fortunately for U.S. drivers, as gas prices continue to decline this summer, that day should keep its title.
The average national price for regular unleaded gasoline dropped another cent from yesterday, down to $3.68 per gallon, according to AAA's Daily Fuel Gauge Report. That's down five cents from last Friday, and about 25 cents from a month ago, making it the fifth straight week the United States has seen gas prices fall. So, while Americans are still finding gas prices to be relatively high—gas is still almost a dollar more per gallon than it was a year ago—they can at least be encouraged that they're on the downswing for now. [See the 10 priciest years in history for gas.]
According to Neil Gamson, a gasoline price expert at the Energy Information Administration, the fall in the global price of crude oil, a central component of gasoline, has contributed to this trend. But he says that increased refining capabilities within the United States over the last couple months can account for the changes in price as well, especially in certain regions like the Great Lakes. "Crude is the big driver, but for certain localities, for certain regions, supply issues were [significant]," he said.
Earlier this year, refineries in the Midwest experienced unplanned shutdowns, which led to shocks in some areas, like Chicago and its suburbs, where average prices skyrocketed as high as $4.50 per gallon back in May. Prices also increased in the spring due to refineries going offline for planned maintenance shutdowns in preparation for the summer driving season. These refining issues, mixed with problems caused by the floods along the Mississippi, accounted for a shortage in gasoline supply and an increase in regional prices, Gamson says.Now that the refineries are back to business, gasoline inventories have increased, lowering prices in these regions and around the country. [See editorial cartoons about gas prices.]
As for crude oil, Patrick DeHaan, senior petroleum analyst at GasBuddy.com, says that the world markets have adapted to the jolt in late January and February that rapidly raised prices in the first place, namely the outbreak of the Arab Spring. By April and May, the price of crude oil had started to level out. "It was a shock factor because something unexpected happened in the Middle East. Now, we're used to a little bit of yelling, if you will, in the Middle East," says DeHaan. "Nobody knew when the dominoes would stop falling, and it seems that things have quieted down now. It's not so much of a shock." [Check out our photo gallery on the unrest in Libya.]
Both Gamson and DeHaan agree that neither Congress nor the president had much to do with the decrease. Efforts to increase oil exploration wouldn't have had any immediate effect anyway, Gamson says. And according to DeHaan, the markets had already begun to ignore calls for opening the country's Strategic Petroleum Reserves, an idea floated by the Obama administration and lawmakers on Capitol Hill when gas prices were still rising. "We've yet to see the Strategic Petroleum Reserves open. Traders now, when they hear the government say they're going to do this, it's more like the boy who cried wolf," he says.
While the $4 per gallon barrier has been avoided for now—the peak on May 11 was just shy at approximately $3.97—U.S. consumers aren't completely in the clear. Global demand for crude oil is still high, particularly from countries like China and India. There's also still chance of supply disruptions in the Middle East and North Africa. The value of the dollar on global markets can also push gas prices up or down for Americans.
At home, the Energy Information Administration warns against fluctuations due to weather, as oil producers and refineries in the Gulf region are expected to face harsh tropical weather during the upcoming hurricane season.