Gas gets cheaper, but still isn't cheap

Friday, October 19, 2012, Vol. 36, No. 42

NEW YORK (AP) — Gasoline across the U.S. is cheaper after a week of rapid price declines. But it still isn't cheap.

The national average for a gallon of gas has dropped 13 cents in the past week to $3.625. That's the biggest weekly decline since the 7-day period ended Nov. 28, 2008, according to Oil Price Information Services analyst Fred Rozell.

Falling oil prices, rising supplies of gasoline and a switch by refiners to cheaper winter blends of gas have contributed to lower pump prices.

But gas is still more expensive than it's ever been for this time of year. The previous record for Oct. 23 was last year's $3.46 per gallon.

Rozell says gas has averaged $3.65 so far this year, 10 cents above the record set in 2011.

OPIS surveys about 120,000 gas stations each day. Among the latest findings:

— The most common price posted on signs around the country is $3.499 per gallon, down 10 cents from last week.

— Prices at the cheapest 1 percent of stations average $3.129 per gallon, compared with $4.645 at the most expensive 1 percent. The spread of $1.50 per gallon is significantly higher than the $1.05 per gallon a year ago.

— Nearly 10 percent of stations across the country are selling gas for more than $4 per gallon, even with the latest declines. A year ago, only about 1 percent of stations were above $4.

— Just around 3 percent of stations are selling gas for less than $3.25. A year ago, 12 percent were under $3.25.

High prices on the coasts explain much of the differences. California hit a record of $4.67 per gallon on Oct. 8 when gas supplies ran short because of refinery and pipeline problems. The state average has dropped 31 cents since, but is still 50 cents more than last year.

In the East, prices are more than 25 cents higher in New York, New Jersey and Connecticut than a year ago. In the South, prices are about 15 cents higher in the Carolinas and Florida.

Still, drivers will likely focus on the near-term and welcome the recent price declines — some steeper than others. Prices in the Midwest are in near free-fall. That follows a summer in which they soared because oil prices jumped and refineries in Illinois and elsewhere went down for unscheduled maintenance. Average prices in Michigan, Ohio and Indiana dropped 21 cents in a week; Illinois saw a 17 cent decrease. Texas and Louisiana had more modest declines of 10 cents per gallon.

More relief should be on the way. Oil has fallen about 7 percent in the last four days to around $85 per barrel while wholesale gasoline futures have declined by the same amount over the past week. That's yet to be reflected at the pump.

AAA predicts pump prices will average $3.40 to $3.50 per gallon by Election Day and $3.25 to $3.40 by Thanksgiving.

One caveat in all this: The decline in oil prices reflects growing concerns among investors and analysts about the strength of the global economy.