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Falling pump prices expected to continue through back half of 2014

story by Wesley Brown
wesbrocomm@gmail.com

Gasoline prices in Arkansas are nearing a seven-month low and should continue to see a gradual decline through Labor Day until the end of the year, the Energy Information Administration’s (EIA) forecasted in its recent short-term U.S. energy outlook.

The EIA’s prediction – and pump prices that Arkansas motorists have seen in the months of June, July and August – are very unusual for the summer vacation season, when retail gasoline prices tend to peak during the high-demand, three-month period before Labor Day on Sept. 1, said AAA spokesman Avery Ash.

“Falling gas prices are nearly the opposite to what we usually see this time of year,“ Ash said. “Refineries are running at full tilt and there is more than enough gasoline in the market, which has helped bring down prices despite multiple overseas conflicts.”

According to the AAA’s monthly gas price report, the national average price of gas posted the largest July decline in six years with average prices dropping about 16 cents per gallon during the month. The report, which is culled from the EIA’s statistical data at the U.S. Department of Energy, also noted that in recent years gas prices have increased considerably in July due to significant demand and occasional problems with refinery production. From 2011-2013, for instance, gas prices nationally increased in July by an average of 16 cents per gallon.

But this year, Ash said, gas prices began the current slide in the final days of June. The national average price of gas has declined for 33 out of 34 days for a total of about 17 cents per gallon. Overall, the annual average so far this year is $3.53 per gallon, which is the lowest average for the first seven months of the year since 2010. Last year the national average through July 31 was $3.57 per gallon.

And the good news doesn’t stop there. Nationally, retail gasoline prices are projected to continue to decline to an average of $3.30 per gallon in December, the EIA predicted. If that forecast holds true, Arkansas motorists could possibly see pump prices around three dollars a gallon at Christmas. Traditionally, Arkansans pay 20 to 30 cents less than the average U.S. retail price for a gallon of gas, EIA statistics show.

For example, Arkansas motorists today are paying in average of $3.24 per gallon to fill up their tank across the state, 13 cents cheaper than on July 20, according to AAA’s daily fuel gauge. The national average price of gas is $3.44 per gallon, down 13 cents from a month ago and the lowest gas prices since the middle of March.

Pump prices in the state’s metropolitan areas range from a low of $3.19 per gallon in the Fayetteville-Springdale-Rogers area to a high of $3.29 at the Texarkana state line. Motorists in the Fort Smith area are seeing prices at an average of $3.19 per gallon and travelers and residents in Pine Bluff and the Little Rock-North Little Rock are paying an average of $3.21 and $3.23 a gallon to fill up their tanks, respectively.

Drivers choosing to fill up the tanks with a higher-grade of gasoline should expect to pay an average premium of $3.60 a gallon across the state. Big rig drivers and other diesel fuel users will see pump prices at about $3.72 a gallon, down five cents from a month ago.

And Arkansas motorists will likely see lower-than-expected gas prices heading into Labor Day weekend, the traditional end of the summer vacation season. AAA’s Ash said prices should remain at their current level or move lower as long as refinery production remains strong and oil costs do not rise due to unexpected issues.

“The biggest threat to continued falling prices would be a major hurricane striking the U.S. Gulf Coast,” Ash said. “Prices also could rise or remain flat if refineries cut back on production or if there are any major refinery outages.”

Meanwhile, the Energy Department’s upbeat outlook continues beyond 2014 as U.S. crude oil production is forecasted to reach record levels.  The EIA said it expects regular gasoline retail prices to average $3.50 per gallon in 2014 and $3.46 gallon in 2015, compared with $3.51 per gallon in 2013.

Below are other highlights of the EIA’s short-term energy outlook.
• Total U.S. crude oil production averaged an estimated 8.5 million barrels per day (bbl/d) in July, the highest monthly level of production since April 1987. U.S. total crude oil production, which averaged 7.5 million bbl/d in 2013, is expected to average 8.5 million bbl/d in 2014 and 9.3 million bbl/d in 2015. The 2015 forecast represents the highest annual average level of oil production since 1972.

• “The growth in domestic production has contributed to a significant decline in petroleum imports,” the EIA said, noting that the share of total U.S. petroleum imports fell from 60% in 2005 to an average of 33% in 2013. EIA expects the net import share to decline to 22% in 2015, which would be the lowest level since 1970.

• EIA projects international Brent crude oil prices to average $107 per barrel over the second half of 2014 and $105 per barrel in 2015. West Texas Intermediate (WTI) crude oil prices fell from an average of $106 per barrel in June to $104 per barrel. The WTI discount to Brent, which averaged $11 per barrel in 2013, is expected to average $8 per barrel and $p per barrel in 2014 and 2015, respectively.

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• “The market's perception of reduced risk to Iraqi oil exports and news regarding increasing Libyan oil exports contributed to a drop in the Brent crude oil spot price …,” the EIA said.  On Tuesday, WTI crude futures traded at $92.91 a barrel on the New York Mercantile Exchange. Brent crude fell four cents to $101.56 in European trading, a 14-month low.

• Natural gas spot prices fell from $4.47 per million British thermal units (MMBtu) at the beginning of July to $3.78 per MMBtu at the end of the month as natural gas stock builds continued to outpace historical norms.  EIA expects that the Henry Hub natural gas spot price, which averaged $3.73 per MMBtu in 2013, will average $4.46 per MMBtu in 2014 and $4.00 per MMBtu in 2015.

• Natural gas futures on NYMEX closed Tuesday up 8.5 cents to $3.87 MMBtu.

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Comments

Keystone Pipe Line

Gas would get a whole bunch less expensive if the President and the democrats would sign off on the Keystone Pipe Line.

Prices lower??

As of now the price of oil is at 93.85/bbl. Gas at the pump has remained around $3.18 here, dropping to $3.09 for a day or two and then being propped back up to $3.18-3.20/gal. At the rate the scammers are going it's not going to drop at all this winter, no matter what the conditions are.

Or it's manipulation

Does it make any sense whatsoever that some of the most radical people seen since 1935 are lopping off heads by a refinery they just stole yet the price of oil is going down? What are the main two things Russia exports? Oil and natural gas? We are already trying to put the economic hurts on them over the Ukraine and this would go right along with that. I have no idea how they make these things happen.

Well Derrick

Have you ever heard of the Keystone pipe line that our President refuses to approve so that America could become energy independent? The America's have more oil than all of the Arab countries combined but we need the Keystone pipe line to flow into Indiana and the Gulf Coast to become the new energy supplier of the world. Why do you think they won't approve a pipe line that would free America from the Arab strangle hold on our economy.

Oilguy and Oilman

You are mistaken regarding the Keystone Pipeline. The pipeline will bring oil to the world market....that's right, for export not domestic consumption. So the price and dependence status will continue. The number of jobs projected by oil companies has been exaggerated. More corporate lies = business as usual.

Are You Telling Us

the Keystone pipeline project spur that ends in Indiana is sending oil for export? Explain that!

Pipedream Wetdream

Are you telling us the Keystone pipeline won't go anywhere else? http://oildependency.org/blog/2012/03/keystone-pipeline-deal-closer/

INDIANA ? New to me. Thought it was Illinois

http://keystone-xl.com/home/keystone-xl-kxl-oil-pipeline-maps/

Oil prices 101

1. More oil for sale from anywhere in the world to anywhere in the world tends to drive the price down. Once you get this you only have to change 1 word to figure out what less tends to do. 2. It's really good idea not to build a pipeline to a refinery that can not refine the type of oil it carries..it needs to go to another one instead. Crossing the Ogallala aquifer is what Nebraska activists who obviously have to have someone else turn off the water for them at home are flippantly complaining about. They somehow envision most of the oil in Northwest Canada ending up in the water supply even though dozens of other pipeline cross it. Warren Buffet lives in Omaha, NE and his train, Burlington Northern Santa Fe is carrying the oil until it all gets worked out. Change?

Fill 'er up Flippantly yourself Mr. Jones

101 is and introduction to oil economics....oversimplified. You assume free market forces which do not exist. Simply turning off the spigot in Saudi Arabia calculated to benefit the futures traders with advanced inside information is part of Oil prices dissertation, far advanced from 101. Talk about "flippantly" !! You berate environmentalists and you ignore the difference in the corrosiveness of the Canadian oil compared to the oil in other pipelines according to some experts. Casey Jones was an engineer, so the rhyme goes. Toot,toot and pollute !!

If environMENTALists could agree on the same reason..

it could add at least some sort of legitimacy to their attempt to mess with nearly everything going on. Well is it saturating the ogallala as if there are no shut off valves or do you go with the corrosiveness of this particular oil or to heck with it, it's not getting sold here anyway so it does not matter in the least. Hey wait there's danger and everybody knows how safe railroad tracks crossing hundreds if highways like it's travelling now. If you have also somehow convinced yourself you know trains from watching them excitedly uncouple here just how fast were those 2 UP trains going when they collided in NEA this week? What I've seen in that area is more like 70-80 right through the middle of a very progressive city. I 'stand my ground' on more oil means lowers prices and would like to point out it doesn't necessarily happen later that day but how long do you continue to bid futures up when the supply keeps building?

Yep Those Pipe lines Are Sure Dangerous

but over 400,000 people die in hospitals every year from medical mistakes, 30,000 to 40,000 people die on our highways and rail lines every year from accidents but have never heard of a death from an oil pipeline. Maybe those E-mental-ists think we should close the hospitals and stop all trucks, trains, and auto transportation. Pipelines are more safe than any other form of delivery and that is a fact.

Please, Facts

Please stick to the facts. Many people have died from oil and gas pipeline incidents. How in the world can you possibly say no one has ever died from this? The only reason you have never heard about a death from an oil and gas pipeline is because you refuse to listen. The link below details many deaths, injuries, property damage and environmental damage done by oil and gas pipelines. http://en.wikipedia.org/wiki/List_of_pipeline_accidents I am actually a proponent of oil and gas pipelines, but please, stick to the facts. Do not make up your own set of facts to support your decision. Let your decision be based on actual facts. Oil and gas pipelines are not safe. They are however, safer than other forms of transporting oil and gas.

A pipeline going sideways is not so bad?

Plains is building one from Cushing to Memphis virtually unnoticed but just try to build one from Canada to Cushing and see what happens to you! Opps problemo with one of the worlds largest solar farms out in CA..birds are catching on fire if they fly in front of the mirrors.

Sideways Oil Pipe Line

This is a good project for Arkansas and will create many good paying jobs but will the jobs last? We must have a influx of small business job creations to build the community and increase revenues at all levels to gain economic growth. Fort Smith must become a business friendly town where visitors will want to spend weekends enjoying great entertainment and events to relax and then brag to all their friends about their great time in our city. Small business will improve, hotels will improve, eating places will be full, and tax revenues will go thru the roof and will stop the constant cries for more tax money from the citizens of the city. The answers are simple but someone in city government needs to get the message that tourism can fund many good outcomes and all it takes is a little effort to create events that will spark outside interest in the community. Get it done!