Gas prices: Are they past their peak?
July is historically a peak travel time in the United States, as gas prices surge in response to the demand, but indications show that prices may have already cooled off this summer.
A number of factors contributed to some anxiety over fuel costs this season and brought back memories of the sticker shock from last summer. Drivers saw prices increase by more than a $1 a gallon so far in 2009 and almost 60 cents from early May. This was due to an increase in demand while supply was low and an initial boost in consumer confidence. (See our blog “Why gas prices are going up?”).
However, the past two weeks prices have seen a decrease after an eight-week climb. Crude oil prices have dropped to about half of what they were last summer when they reached over $130 a barrel. A reduction in demand coupled with an increase in supply and production have helped to push prices back down a little earlier than expected. Plus, the economy and recession has forced many to change travel plans and stay closer to home. AAA expected July 4th travel to be down almost two percent from last year.
The Energy Information Administration (EIA) said in its latest, weekly report that “it appears that the summer market may be near, if not past, its peak.” And looking at the trends from past years, as illustrated in the embedded EIA graph, it is easy to see that prices historically dip after the July 4th weekend.
Unless there is a major hurricane or storm that affects refineries or an unexpected economic change, the June 22nd price of $2.69 a gallon could be the highest we’ll see for sometime. And that’s good news for people who still have road trips and other driving adventures planned for the rest of the summer.
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