If you’ve got a vacation planned in the near future, there’s good news for you: gas prices are going down. The per-gallon price has hit its lowest point this year—on average, about $3.10 per gallon in the St. Louis area.
The lowest price in St. Peters on Wednesday morning was $3.03 per gallon. Keep in touch with local gas prices by checking St. Peters Patch's commute page, which includes the lowest local gas prices.
“The biggest trend on gasoline prices is the significant reduction in crude oil,” said Mike Right, vice president of public affairs for AAA St. Louis. He noted that there has been about a 30 percent price-drop for crude oil since May.
“To that, add the fact that inventories of both gasoline and crude oil in the US are quite high, and the demand continues to be very weak,” he said. “We have an abundant supply and an anemic demand—so you can only expect the prices to decline.”
Though experts predicted that gas prices could reach as much as $5 by mid-summer, according to a report from Fox2Now, prices started to stabilize in April when tensions between the U.S. and Iran calmed and certain domestic refinery issues were settled.
"The multimonth slide in gas prices has been largely the result of bearish global economic news and declining crude oil prices, which have fallen more than $20 per barrel since the beginning of May," according to a press release from AAA. "As a general rule-of-thumb, a $1 per barrel decline in crude oil prices results in a decline in gas prices of about 2.5 cents per gallon."
Improvements in fuel economy plus an abundant supply mean fuel lower prices.
Right said that there have been “significant improvements in the overall fuel economy in the last decade or so.”
“And in addition to that, beginning around 2007 the economy really wasn’t growing at an appreciable rate,” he said. “A lot of folks have ratcheted back on travel activity.”
He added that vehicle miles in travel peaked in 2007, which means that on average, Americans are driving fewer miles today than they did five years ago.
Still, given the news about the drop in prices and the upcoming holiday, he said AAA expects to see a rise in travel.
“We’re expecting a bump in travel over the July holiday—should be up about 5 percent from last year, which is noticeable,” he said. “It has to do with the fact that the holiday falls mid week, and many people are taking off extra days at the beginning or end of the week to travel.”
Will gas prices continue to drop?
Right said that going forward, he expects to see some movement, both up and down, in gas prices, but that, so long as conditions remain stable, the downward trend will generally continue.
“If we can get by without any major outages or pipelines going down, we should see the current gas prices going down even more,” he said. “If you look at what the futures (markets) are doing as far as crude oil and gasoline, they’re looking several months out and the prices are maintaining.”
“With an oversupply situation and a demand,” he added. “I think we will see about $2 per gallon on average.”
Does this news change your summer travel plans?