Gas prices may inch lower into December

An OPEC decision later this week could ruin the bargain, but so far gasoline prices are holding relatively steady.
By Daniel J. Graeber  |  Nov. 28, 2017 at 8:25 AM
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Nov. 28 (UPI) -- A steady supply of gasoline, despite North American pipeline disruptions, means U.S. drivers may see gas prices drop into December, analysis finds.

Motor club AAA reported a national average retail price of $2.50 for a gallon of regular unleaded gasoline Tuesday, more or less unchanged from the previous day and about 3 cents less than last week. The price at the pump on average has moved lower every day for more than a week.

"AAA expects to see gas prices trend cheaper through the year-end, decreasing as much as 20 cents for some motorists before year-end," AAA spokesperson Jeanette Casselano said in a statement.

By market, the Great Lakes states are the most volatile and supplies came under pressure in mid-November when TransCanada shut down its Keystone oil pipeline after a spill in South Dakota. The line was back up and running at a reduced rate early Tuesday.

AAA said that, so far, retail markets haven't seen much of an impact from the closure, though regional gasoline inventories are already 3.2 million barrels below what they were this time last year. The Great Lakes market is in the trough of its regular see-saw pattern for gasoline prices, with Indiana's state average coming in at 15 cents per gallon less than last week.

Patrick DeHaan, the lead petroleum analyst for GasBuddy.com, said the region is at a "moderate risk" for a spike in gas prices. On average, prices are down as much as 55 cents per gallon over the last few weeks as retailers compete for a market share. That means some service stations may be taking a loss and now need to play catch up.

Nationally, a survey of analyst results from S&P Global Platts found gasoline inventories nationwide could surge by as much as 1.1 million barrels from last week, which could signal relief is ahead for motorists.

On the West Coast, the most expensive market in the country, the rate the refineries are working is high enough to make up for a small spike in demand, AAA said. Still, though, at $3.19 per gallon, California has the highest state average in the Lower 48, though some of that is because of a new fuel tax.

Looking ahead, a decision later in the week from the Organization of Petroleum Exporting Countries on what to do with a production agreement credited with propping up crude oil prices could determine what happens next for consumer gasoline prices.

"OPEC's decision may reverberate at pumps in the months and year ahead, and while the decision is likely to be an extension of production cuts made at their meeting a year ago, it's certainly not yet guaranteed," DeHaan said.

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