Gasoline prices fall but remain higher than usual
Retail gasoline prices fell for the fifth straight week, but they will have to drop off a
cliff in the coming days to get below historically high levels for autumn.
Diesel, the fuel of commerce in the U.S., powering the nation's farming, construction, trucking and railroad industries, is also at a record high price level for this time of year.
This is the new normal for fuel prices in the U.S., according to a recent Energy Department report.
By one standard, for example, the average cost of a gallon of regular gasoline in California on Tuesday was $3.806, down two cents from a week ago. That's according to the AAA Fuel Gauge Report, which uses statistics from more than 100,000 retail outlets across the U.S., gathered by the Oil Price Information Service and by Wright Express.
But that's about 71 cents a gallon higher than the year-ago price. It shatters the old record for this week of the year of $3.47 a gallon set in 2008. The average cost of diesel in California is $4.122 a gallon, breaking the old record for this week of the year of $3.656 a gallon. A year ago, the state's average for diesel was $3.338.
Nationally, average prices aren't as bad, but are also at record high levels for this time of year. The average fell from $3.408 a gallon last week to $3.396 Tuesday, according to the AAA. But that broke the old record for this week of $3.151 a gallon set in 2008. It's also 58.9 cents a gallon higher than the year ago price.
This is happening at a time of year in the U.S. when demand for fuel is usually low, the ebb between the summer driving season and the family gatherings of the holiday season. In years past, this would normally result in a glut of fuel supplies that would force a much sharper drop in prices.
But these days, high global demand is keeping prices relatively expensive. U.S. refiners reap bigger profits by selling products to other countries, which keeps domestic prices higher than normal, Energy Department statistics show.
"Total U.S. exports of finished petroleum products have increased more than 60% since 2007 as markets have become more globally integrated. This trend is driven primarily by finished motor gasoline and distillate fuel oil (which includes diesel) which are increasingly exported to Latin America. Annual U.S. exports of gasoline and distillate increased by 133% and 144%, respectively, from 2007 to 2010," according to the Energy Department's most recent Short Term Energy Outlook.
The trend has continued in 2011, the Energy Department said, "with diesel exports averaging 730,000 barrels a day, a 32% increase over an average of 554,000 barrels a day during the same period in 2010."
For these and other reasons, the Energy Department said it is expecting a national average of $3.47 a gallon for regular gasoline in the fourth quarter. That would be a record for end-of-the-year prices.
Photo: Pumping gas at a Costco. Credit: Associated Press