A nationwide survey called Lundberg Survey indicates that the average price for regular grade gasoline has dropped 9 cents per gallon in the U.S. Refineries are said to have processed more petroleum, which has resulted in the price decline.
Analysts suggest that the drop in fuel prices has come despite the rising tensions in the Middle East and surge in the global crude oil price. Industry analyst Trilby Lundberg, the president of Lundberg Survey, suggests that U.S. refineries are believed to have abundant supplies of crude oil and now they are reducing the wholesale price to achieve higher sales.
"It's really a mid-summer gift," says Lundberg. "Refiners have been on a kick to run more crude, run at high rates and to cut price. There is an abundance of gasoline, inventories are high, and refiners are cutting to chase those summer sales."
The Lundberg Survey suggests that the survey was conducted on 2,500 gas filling stations across 48 states in the country. The survey highlights that the lowest average price of gas was $3.23 in Tulsa, Oklahoma, while the highest price reported was in San Francisco of $4.03. The survey points out that the lowest average price in Sacramento, California was $3.86. The current national average of gas in the U.S. is $3.51 per gallon.
The U.S. Energy Information Administration (EIA) indicates that the stock for gasoline increased 3.38 million barrels to 217.9 million. The demand for gasoline for the four weeks ended July 18 was 8.988 million barrels a day, which is a decrease by 0.6 percent when compared to the same period of 2013.
Gasoline futures on the Nymex slipped 4.32 cents, or 1.5 percent, to $2.8653 a gallon in the two weeks ended July 25 as supplies grew on strong refinery production.
Demand for oil has increased drastically in the last few years and oil plants are said to have increased production by around 65 percent in the last five years.
Strong production by refineries has also affected gasoline futures on the New York Mercantile Exchange (Nymex), which has fallen 4.32 cents, or 1.5 percent, to $2.8653 a gallon in the two weeks ended July 25 this year.
Customers will definitely be happy to pay less to buy gas. However, it remains to be seen if the price drop is temporary or if it sustains for longer period of time.