As millions of Americans prepare to hit the roads for holiday trips to the malls or Grandmother’s house, they’re getting a gift at the pump.
Gas prices have slid to their lowest levels of the year. The national average retail price per gallon was just shy of $3.25, according to AAA and the Oil Price Information Service.
The national average price has dropped every day this month, and has fallen 16 percent since mid-September. It is now at the lowest average price since Dec. 28, 2011.
“I believe we will go lower,” said OPIS analyst Tom Kloza. “It’s typical to get weaker prices at the end of the year.”
In Leitchfield, prices were pacing the national average Monday afternoon, at $3.25 to $3.26 per gallon at most stations. And as is common, prices in most surrounding counties were dropping more quickly than in Grayson.
In Breckinridge County, for example, both Cloverport — at $3.03 — and Hardinsburg — at an average $2.98 — were reporting significantly lower per-gallon charges. Most stations in Elizabethtown were also in the $2.98 to $2.99 per gallon range, according to GasBuddy.com, while Owensboro and Bowling Green stations were seeing prices of about $3.06 and $3.12 per gallon, respectively. Hartford and Beaver Dam were seeing prices in the $3.06 to $3.07 range.
Only Morgantown, where gas was at $3.29 per gallon, and parts of Louisville were reporting higher prices than Leitchfield.
The break for consumers, while welcome, isn’t likely to change 2012 likely going down in history as the year with the highest average per gallon charges to date.
The national yearly average is $3.63 per gallon so far, compaired to last year’s national average of $3.51, said Patrick DeHaan, senior petroleum analyst for GasBuddy. He attributed the jump to supply problems in California and major flood damage and power outages at northeastern refineries from Hurricane Sandy.
But now, with U.S. supplies rising and demand continuing to fizzle, wholesale and retail prices in most states are dropping fast and are expected to continue falling through the end of the month.
“We’ve gone from an industry that was worried about enough gas to one wondering how it will deal with all of this gas,” said OPIS’s Tom Kloza. “And we haven’t seen the bottom yet.”
“All of a sudden, we’re at a 7 1/2-month high in supply, and demand is just tanking,” says Brian Milne of energy tracker Telvent DTN. Moreover, many refineries have been running close to full capacity. Others, including a New Jersey refinery shuttered since Superstorm Sandy, are back on line.
Still, when it comes to holiday travel, money often plays a smaller role in what people decide to do, the travel experts said.
“The year-end holiday season remains the least volatile of all travel holidays, as Americans will not let economic conditions or high gas prices dictate if they go home for the holidays or kick off the New Year with a vacation,” said AAA president and CEO Robert Darbelnet.
The automobile club predicts what people don’t spend at gas stations could free up money for more spending on presents, dining and entertainment.
How is 2013 shaping up? Despite five consecutive years of declining consumption, tensions in the Middle East and intermittent supply issues have inflated pump prices. The U.S. now uses 500,000 to 700,000 barrels less crude a year than in 2007, levels influenced both by the economy and more efficient vehicles.
A slow-growth economy, which could take a bigger hit if the country slips into a post-fiscal cliff recession, could further dampen demand. Moreover, domestic crude oil production continues to rise. All will factor in 2013 prices.
“We’ll still have these bipolar swings where regional markets take off higher when there are hiccups and breakdowns,” Kloza says. “But on balance, I would bet that 2013 will be a cheaper year for prices.”
— The Associated Press contributed to this report.