Gasoline prices have dropped 15 cents in the past 20 days and are heading lower.
In Arkansas, a gallon of regular averaged $2.438, AAA reported Thursday. But according to gasbuddy.com, a Web site where people can report gasoline prices, regular was priced as low as $2.17 Thursday in Fort Smith.
Experts said the Arkansas high seen June 18 of $2.590 was likely the peak for the season, barring hurricanes, a major economic turnaround or a supply disruption.
"I think the consensus is that we have seen the peak when crude briefly traded above $73 a week and a half ago," said Tom Knight, vice president of supply and trading for Texarkana, Texas-based Truman Arnold Cos.
That’s good news for Bobby Paine of Little Rock. The 25-year-old recently traded in a 2006 Jeep Wrangler for a 2009 Chevy Malibu, increasing his vehicle fuel efficiency by 8 miles per gallon.
He’s now saving about $70 a month and doesn’t need to fill up nearly as often as a result of the trade-in and lower gas prices, he said.
Gas prices definitely hurt when they go up, he said.
"Right now, it’s pretty good," he said. "Of course, if it goes up like it used to be, it’ll be a little bit harder.
"I’m glad I made the switch, and I’m saving a lot of money doing it." Prices at the pump are sinking primarily because the price of crude oil has dropped, Knight said. Bad economic news has taken the shine off of oil and gasoline futures.
Light, sweet crude oil futures have dropped from a high of $72.68 a barrel on June 11 to close at $60.41 Thursday on the New York Mercantile Exchange, and gasoline futures went from $2.06 to $1.66 a gallon in that period.
Typically, there’s a corresponding 2.5-cent change in gasoline prices when crude oil moves by $1.
There should be more downward pressure on gasoline in coming days, Knight said. He thinks prices could go 50 cents lower than the highs seen in June.
Stocks of crude oil and gasoline are up from earlier this year, said Mike Right, AAA spokesman. Gasoline inventories had been down because of refinery problems and minimal production.
According to the U.S. Energy Information Administration, total gasoline stocks were at 213.1 million barrels July 3, the most recent numbers available, up from a low of 201.6 million barrels about a month ago.
Gasoline prices typically peak between Memorial Day and July 4, Right said, although some years buck that trend.
The Fourth of July weekend turned out to be a bust for driving demand, said Phil Flynn, vice president and energy analyst for Chicago-based Alaron Trading Corp. That helped kill the optimism that was buoying oil and gasoline prices.
The Energy Information Administration reported that gasoline demand averaged 9.229 million barrels per day the week ending July 3, down from the previous year’s 9.347 million barrels.
"We’re losing the momentum, and that’s driving prices back down," Flynn said.
But prices at the pump aren’t going down as fast as they should be,
argues Judy Dugan, research director for Consumer Watchdog, a
California-based group that identifies itself as fighting “corrupt
corporations and crooked politicians.”
“That’s the usual pattern with prices at the pump, up like a rocket
and down like a feather,” she wrote in an e-mail. “But the bigger
message from this spring/summer pricing roller-coaster is that it
shouldn’t have happened in a wrecked economy, with gasoline consumption
continuing to fall along with job losses.”
She said it’s time for Congress to act to prevent speculation from
playing havoc with energy prices. The Commodity Futures Trading
Commission said this week that it will hold a public hearing on the
issue next month to determine if energy futures contract trading needs
to be limited.
The AAA’s Right warned that there’s no guarantee that prices will continue to go down. Economic improvement or a supply disruption would immediately push prices higher.
"All of this could turn on a dime," he said. But for right now, "all the indicators are favoring the consumer."