Retail gasoline is heading for the biggest monthly drop since the United States was in the midst of the recession, as global oil demand stagnates and crude prices fall.
The daily national average for gasoline has slipped 32.3 cents so far in October to $3.01 Wednesday, according to data from Heathrow, Florida-based auto club AAA. That’s the lowest since December 2010. Prices are down 9.7 percent this month, poised for the steepest percentage decline since December 2008.
Motorists are benefiting from the combination of U.S. crude production at the highest level in at least three decades and weak demand that’s caused oil prices to drop 23 percent since June.
Retail gasoline prices are expected to drop another 15 to 20 cents before leveling off around Thanksgiving and remaining steady through the winter, Andy Lipow, president of Lipow Oil Associates in Houston, said in a telephone interview.
“The forecast for increased demand for oil around the world has been lowered over the last four months, changing the perception for the oil markets to one of oversupply in light of rapid growth of production in the U.S. and Canada,” Lipow said.
South Sound gas prices this week continued the decline that began in midsummer when prices peaked near $4 a gallon.
In the Tacoma area according to TacomaGasPrices.com, the average price of a gallon of regular fell by 10 cents a gallon in the last week to $3.12 a gallon. Average prices have fallen 51 cents a gallon in the South Sound since late September.
Compared with this time last year, local gas prices are 26 cents a gallon lower.
In Pierce County, the price leaders were two Arco stations, one at 13005 Gravelly Lake Drive SW and the other at 1101 S. Sprague Ave. Both stations were selling gas for $2.73 a gallon.
In the Olympia area, Safeway at 3205 Harrison Ave. NW was the least expensive outlet with prices at $2.86 a gallon for cash sales. The price was lower with Safeway club points.
In Federal Way, Safeway was also the price leader. The chain’s station at 1207 S. 320th St. was selling gas for $2.84 a gallon.
Statewide, the average price for a gallon was $3.21 a gallon, making Washington 13th most expensive among the states. South Carolina was the lowest with an average of $2.76. Hawaii was the highest with an average of $4.02. It was the only state with a gas price average over $4.
The difference between 2008 and 2014: Oil prices have fallen fast now and “it’s led to a significant decline in gasoline prices in a short period of time,” Lipow said. That’s good news for the consumer, and is coming at a time when the economy continues to show signs of recovery.
Gasoline prices have been falling in all regions of the country, with the biggest recent declines on the West Coast and the smallest recent drop in the Midwest, the Energy Information Administration said Oct. 27 in its weekly Gasoline and Diesel Fuel Update.
West Texas Intermediate crude, the U.S. benchmark priced in Cushing, Oklahoma, dipped below $80 a barrel on Oct. 16 for the first time since June 2012.
U.S. crude production rose 0.4 percent to 8.97 million barrels a day last week, according to weekly EIA estimates that began in January 1983. The EIA’s monthly data, which goes back to 1920 and is based on data collected by state and federal agencies, shows production at the highest since 1986.
Gasoline stockpiles fell 1.2 million barrels, or 0.6 percent, in the seven days ended Oct. 24 to 203.1 million, EIA data show.
Staff writer John Gillie contributed to this report.