Motorists have cut back on driving so much that gas supplies have grown and prices may start falling. Of course, all it takes is a crisis of any imaginable description and prices could soar again. You have to wonder, if prices continue to fall, whether consumers would stop conserving, stop considering fuel-efficient cars and go back to what they were doing when gas was $2.50 a gallon.
Reuters reports:
U.S. drivers could enjoy a drop of up to 50 cents per gallon in
gasoline prices by this spring as high fuel prices and the threat of a
recession force them to conserve, experts said on Wednesday.
U.S. gasoline supplies hit a near-14-year high of 227.5 million
barrels last week, helped by falling demand for the fuel, the U.S.
Energy Information Administration said on Wednesday.
"Gasoline stocks are continuing to increase and it implies that
people are probably cutting down on gasoline consumption -- a result of
the weakening economy," said Phil Flynn, an analyst at Alaron Trading
in Chicago.
The story continues:
"Something dramatic is occurring with consumer driving habits,"
Geoff Sundstrom, a spokesman for AAA motor club, said in a telephone
interview. "These numbers, if sustained over next couple of weeks,
should set the stage for a reversal of price forecasts."
He said U.S. gasoline prices in the spring could fall 50 cents a gallon from Wednesday's $2.98.
Spring gasoline prices in the world's largest energy consumer set
the stage for fuel prices during the summer months when vacationers
drive fuel demand to annual peaks.
In December, when oil prices were trading closer to a record $100 a
barrel, compared with Wednesday's level of $87 a barrel, AAA predicted
spring gasoline prices could hit a new record high above $3.50 per
gallon, with fuel in some regions of the country hitting above $4.00.
The EIA had forecast similar spring gasoline prices.
On Wednesday, EIA analyst Doug MacIntyre warned that unexpected
maintenance or economic run cuts at oil refineries could spike gasoline
prices at any time, especially since U.S. refineries last week were
only running at 84.3 percent of capacity.
Even so, he said he "certainly" expects that his agency next month will publish lower spring gasoline price forecasts.
