The title says it all! It seems that experts have agreed that regardless of the increase in gasoline prices this year, prices have slowly but surely began to fall once more. It appears they’ll continue falling as the driving season approaches.
This fortunate turn of events is prompted by the fact that the price for one of the most common types of gasoline futures traded in New York has dropped by a whopping 30 cents! Going from over $3.40 a gallon at the beginning of April to just over $3 a gallon Wednesday.
Futures contracts are financial instruments that buyers and sellers of large amounts of gasoline — or any commodity — use to set prices. Analysts say the current drop in gas price should begin to appear in local gas prices at service stations over the next few weeks
The main reason for lower gasoline futures prices is the declining cost of Brent crude and other crude oil that gasoline is made from. Brent crude has dropped from over $125 a barrel in early April to under $120 currently, largely a result of tensions easing with Iran over its nuclear program. Recent signs of a slowing global economy have also helped push down prices.
Gasoline prices at the pump have begun a similar decline. Gas prices currently sit at $3.84, according to AAA. Gasoline stockpiles remain low in Europe and the East Coast of the United States. Several East Coast refineries have been idled over that last several months. They are having a hard time making money because they can only process light, sweet — and expensive — crude from Europe and Africa.
Demand from the developing world, meanwhile, remains strong. There’s a chance that some of these refineries could close permanently, talking roughly 50% of the East Coast’s refining capacity offline. Analysts are watching for potential supply disruptions that could arise if more refineries close on the U.S. East Coast.
Information gathered from Yahoo.