HEATHROW, Fla.–As the summer travel season heats up, it appears gas prices are moving in the opposite direction of temperatures, which will likely influence the types of cars Americans are buying and financing.
The American Automobile Association is forecasting gas prices are poised for additional declines, as the prices of crude and wholesale gasoline plunged last week. The result? More discounts at the pump.
In many states, gas prices are at their lowest prices in two years, according to AAA, and 30 cents per gallon or more below where they were a year ago.
"After a long and expensive refinery maintenance season, most refineries are back at full strength, pumping out a lot of gasoline and applying downward pressure on prices at the pump," said Mark Jenkins, spokesperson for AAA - The Auto Club Group. "Retail prices are also being driven lower by big drops in the stock market. Crude oil and gasoline futures collapsed last week in reaction to the ongoing U.S.-China trade dispute and news of the Trump administration's plans to enact 5% tariffs on Mexican goods. Market watchers are concerned over how these issues could stifle long-term demand growth."
Cost Per Barrel Declines
The price of oil dropped more than $5 a barrel on the NYMEX last week. WTI settled at $53.50/b on Friday, the lowest daily settlement since February, AAA reported. The highest price so far this year was $66.30 per barrel, just six weeks ago. Meanwhile, gasoline futures dropped 13 cents last week, combining for a total decline of 24 cents during the past two weeks.
AAA further noted domestic oil production rates are soaring. At 12.3 million barrels per day, the U.S. is producing crude at record highs, and 16.5% more than this time last year. Meanwhile gasoline production in the U.S. is up 1% from a year ago.