July 31, 2008
Price of Gas Creeps Down
By Jason Brudereck, Reading Eagle, Pa.
Jul. 31--The average price for a gallon of unleaded gasoline in Berks County has fallen 4.5 percent from the record high of $4.03 set July 8.But at $3.85 per gallon Wednesday, the price is still 40 percent higher than the $2.75 a gallon cost a year ago.
With consumer demand for gasoline increasing slightly in the past few weeks but with demand down compared with last year, it's difficult to predict where prices and demand will go from here, analysts said.
Motorists might buy more gas with prices below $4, analysts said.
"Maybe people who put off taking a vacation earlier in the year are now deciding to go ahead," said Doug MacIntyre, a senior oil market analyst at the U.S. Energy Information Administration.
If demand picks up, that might prevent gas prices from falling quickly, he added.
The weekly petroleum report the EIA released Wednesday showed that national gasoline inventories fell by 3.5 million barrels last week to 213.6 million.
Analysts had expected inventories to increase as consumers drove less in response to high gas prices.
But one report is not a good indicator of overall demand, said Michael D. Axman, spokesman for AAA of Reading-Berks County.
"Americans drove 10 billion miles less in May 2008 compared to May 2007," Axman said. "That's signifi cant."
That happened as people turned to public transportation, consolidated their errands, worked from home and took other measures to avoid driving, Axman said.
Other EIA data show U.S. consumer demand increased from 9.322 million barrels July 4 to 9.348 barrels July 18, an increase of about 0.3 percent.
But demand is still down nearly 3.3 percent from this time last year, when U.S. consumers bought an average of 9.655 million barrels a day.
In recent days, the trading price for crude oil has dropped from $147 per barrel to $122, a decline of 17 percent, although it rose to almost $127 Wednesday because of the gasoline inventory report.
But gas prices didn't fall by 17 percent because they didn't rise at the same rate that oil did, MacIntyre said.
Over the next few months, MacIntyre said, gas should remain below $4.
"But I don't envision a drop to $3 any time soon," MacIntyre said. "Another factor is going to be hurricanes (affecting offshore drilling)."
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