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AAA: Savings at the pump starting to plateau

Price at the pump not much less than last year, though cheap gas may be the new normal.

By Daniel J. Graeber
Gasoline prices are following crude oil prices lower, but longevity of the bear market means savings aren't a whole lot more than last year, AAA finds. File photo by John Angelillo/UPI | <a href="/News_Photos/lp/85cb1964005cfd8c19206eacd14cb72f/" target="_blank">License Photo</a>
Gasoline prices are following crude oil prices lower, but longevity of the bear market means savings aren't a whole lot more than last year, AAA finds. File photo by John Angelillo/UPI | License Photo

WASHINGTON, Jan. 20 (UPI) -- U.S. drivers continue to see gas prices drop, though the rate of declines are leveling off with prices only 18 cents less than this date last year, AAA said.

Motor club AAA reports a national average retail price for a gallon of regular unleaded gasoline at $1.87, a decline of 4 percent, or 8 cents, lower than one week ago.

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Gasoline prices more or less mirror crude oil, which started the year with a dramatic downturn. AAA said, as with crude oil prices, the rate of decline in retail gas prices is the fastest it's been since the middle of November.

"Motorists typically enjoy falling gasoline prices in early winter due to decreased demand for gasoline and that also is helping to push prices downwards," the motor club said in a weekly retail market report. "Despite recent declines, the national average price of gas is only 18 cents per gallon cheaper than a year ago since prices also were very low in early 2015."

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Brent crude oil dropped 57 percent from Jan. 20, 2014, to Jan. 20, 2015 and is 39 percent lower than on this date last year. Most market analysts expect crude oil prices to remain suppressed, moving back above the $50 per barrel mark only by 2017.

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U.S. retail gasoline prices tend to swing higher during the spring as refiners start making a summer blend of gasoline, which is more expensive to produce. Few analysts expect retail prices to move above $3 per gallon any time soon.

"AAA previously estimated the annual average price of gas in 2016 will be $2.25-$2.45 per gallon, although the sharp decline in oil costs since the year began has the potential to lead to even lower gas prices if global oversupply and economic concerns persist," the motor club said.

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Oklahoma has the lowest state average price in the nation at $1.58 per gallon. Only 12 states in the nation are reporting an average price above $2 per gallon.

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