Sunday, September 29, 2013

Gasoline Prices down 35 cents per gallon year-over-year

by Bill McBride on 9/29/2013 03:03:00 PM

Gasoline prices are down about 35 cents year-over-year at $3.42 per gallon nationally.

Some of the year-over-year price decline is related to slightly lower Brent oil prices, but most of decline is because there were refinery and pipeline issues last year at this time. In California, prices spiked last September, and are down about 80 cents year-over-year this September (put Los Angeles into the graph below to see the huge spike last year).

Prices are close to the current EIA forecast (from two weeks ago):

Monthly average crude oil prices increased for the fourth consecutive month in August 2013, as supply disruptions in Libya increased and concerns over the conflict in Syria intensified. The U.S. Energy Information Administration's (EIA) forecast for Brent crude oil spot price, which averaged $108 per barrel during the first half of 2013, averages $109 per barrel over the second half of 2013 and $102 per barrel in 2014, $5 per barrel and $2 per barrel higher than forecast in last month's STEO, respectively. Projected West Texas Intermediate (WTI) crude oil prices average $101 per barrel during the fourth quarter of 2013 and $96 per barrel during 2014. Energy price forecasts are highly uncertain and could differ significantly from the projected levels. The current values of futures and options contracts suggest the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in December 2013 at $86 per barrel and $131 per barrel, respectively.
...
EIA's forecast for the regular gasoline retail price averages $3.44 per gallon in the fourth quarter of 2013, 11 cents per gallon higher than in last month's STEO. The annual average regular gasoline retail, which was $3.63 per gallon in 2012, is expected to be $3.55 per gallon in 2013 and $3.43 per gallon in 2014. As in the case of crude oil, the current value of futures and options contracts suggests a wide uncertainty in market expectations.
emphasis added
WTI oil prices have been declining over the last month, with WTI at $102.87 per barrel.  Brent is at $108.63. A year ago, WTI was in the low $90s, and Brent was around $111 per barrel.

The following graph is from Gasbuddy.com. Note: If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent.



Orange County Historical Gas Price Charts Provided by GasBuddy.com