Gas prices inch lower, but still way above the June average

Thank OPEC and higher U.S. exports for a gas price that's the highest in three years, even though seasonal demand has brought some relief.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Dec. 5, 2017 at 7:11 AM
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Dec. 5 (UPI) -- Seasonal factors finally caught up with the U.S. gas market and, with refineries making a cheaper winter blend, the price at the pump is lower, analysts said.

Motor club AAA lists a national average retail price for regular unleaded gasoline at $2.48 per gallon for Tuesday, the lowest price in more than a month. Lower demand because of the cooler weather and a cheaper winter blend of gasoline has finally brought relief to consumers.

"On the week, 90 percent of states saw their gas price average drop - some even by double digits," Jeanette Casselano, a AAA spokesperson, said in a statement.

U.S. refineries switch late in the year to a winter blend of gasoline, which is less expensive to make because more steps are needed with the summer-blend to prevent excessive evaporation. Gas prices, however, are still relatively high because of crude oil prices. The average price for gas in June was around $2.29 per gallon.

The Organization of Petroleum Exporting Countries started cutting production in January and agreed last month to keep it under control through 2018. That, and higher U.S. oil exports, means supplies are at a premium. Last week, Patrick DeHaan, a senior analyst at GasBuddy, said, in essence, there are "more hands in the cookie jar" when it comes to U.S. oil and gasoline supplies.

For the second year in a row, the United States is on pace to become a net gas exporter once the year is over. Nevertheless, federal data show domestic demand is lower, which has supported a slight drop in gas prices so far in December.

By market, the West Coast remains the most expensive in the country, with California topping the Lower 48 with $3.16 per gallon on average. By AAA's estimate, however, the region has plenty of gas on hand and prices there should drop at least through the rest of the week.

The Great Lakes market, meanwhile, is the most volatile. Indiana saw gas prices drop 14 cents from last week and 40 cents from last month. Drivers in the region got some relief after pipeline company TransCanada restarted its Keystone pipeline, following a November spill in South Dakota.

DeHaan, however, said to enjoy it while it lasts. Domestic oil inventory levels are lower than they were last year and gas prices are actually the highest they've been in three years.

"Motorists should enjoy the falling prices now because it's likely that prices may again rise approaching the New Year as oil prices continue to show strength," he said in a statement.

The federal government estimates the average price for gas will be around $2.45 per gallon next year, 5 cents more than the anticipated average for 2017.

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