WATERLOO (MCT) — Motorists looking to close the traditional summer driving season with a long weekend on the road likely will find supplies holding steady and prices perhaps receding a bit, according to analysts.
“It does look good,” said Phil Flynn, a futures account executive with the Chicago-based Price Futures Group. “We are looking for gasoline to come down before Labor Day. We could see prices down another 10 to 15 cents a gallon.”
As of Friday, according to the American Automobile Association, the price of regular-unleaded gasoline was averaging $3.551 in the Waterloo-Cedar Falls metropolitan area, up from $3.530 a week earlier but down from $3.613 a year earlier. Prices peaked this year at an all-time record of $4.089 May 22.
For diesel, the price Friday was $3.816, compared to $3.822 a week earlier and $3.989 a year ago. Diesel fuel hit its record price of $4.731 in July 2008.
For retail fuel prices, there are a couple of reasons for optimism, said Jeff Lenard, vice president for industry advocacy with the Alexandria, Va.-based National Association of Convenience Stores, a trade group that represents more than 80 percent of fuel retailers in the U.S.
“The good news is that August is the peak month for gasoline and it is winding down; the other good news is that the switchover from summer-blend gas is coming and typically takes pressure off prices as well because there are fewer boutique fuels required,” Lenard said.
The switchover varies by area but they are mainly Sept. 1 and Sept. 15, with California and other areas changing over a month later, Lenard said.
But, it’s not all good news, he said.
“While the switchover back from summer-blend is much less painful than the spring transition, the transition traditionally leads to a small bump,” he said.
“We need to see how oil traders view the situation and if it affects the price of oil,” he said.
The hurricane season also inevitably makes futures traders jittery, as well, Lenard said.
“So far so good, but remember that Sandy hit in late October last year,” he said. “Any major storm that hits refining on the East Coast or the Gulf Coast could dramatically affect supply and prices.”
On the other hand, refineries are producing at all-time highs, Flynn said.
“We have to buffer that with what’s going on in the Middle East, but, to be honest, we’ve been shielded from that because of the boom in production here,” Flynn said. “Prices can continue to come down even with the spike up in crude. If we have a big spike on crude next week, if it gets to $110 a barrel, prices are going to follow.”
Jim Lind, owner of Jim Lind BP Service in Waterloo, said the outlook for the short-term is positive.
“Lots of positive things going our way,” he said. “Clearly the glass is more than half full.”
He agreed, though, that traders can get spooked by events in the Middle East.
“The Mideast continues to be in a lot of turmoil, and that makes people nervous, but we do have a lot of domestic (production) activity.”
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