U.S. gasoline prices drop below year-ago levels

Dec. 16 (UPI) -- A decline in demand has led to a steady drop in retail gasoline prices, which are about 4% below year-ago levels, data published Friday by AAA show.

The motor club reported a national average retail price of $3.18 for a gallon of regular unleaded gasoline, down 4%, or 13 cents per gallon, from this time last week and this time last year. The price at the pump topped $5 per gallon in June, but has been on a decline more or less since.

Global supplies remain tight due in no small part to sanctions that limit exports of Russian crude oil and refined petroleum products, though fears of a worldwide recession are offsetting some of those concerns and creating bearish conditions across most major commodities.

"Increasing supply and lower gasoline demand are pushing pump prices lower," AAA noted. "As demand remains low and stocks grow, drivers will likely continue to see pump prices decrease through next week."

The U.S. Energy Information Administration reported this week that the total amount of refined petroleum products delivered to the domestic market, a proxy for demand, averaged 19.8 million barrels per day, down by 6.9% from the same period last year.

Compared with the similar week in 2019, before the COVID-19 pandemic, total products supplied came in at 20.4 million bpd. That suggests that, despite a steady decline in U.S. inflation, confidence in the economy might not be as strong as recent data would suggest.

Ahead of the busy end-of-year holiday travel period, prices look to continue their steady march lower. At least a dozen or so states are posting an average price below the $3 mark, with Texas setting the low bar for the nation at $2.65 per gallon.

Patrick DeHaan, the senior petroleum analyst at price-watcher GasBuddy, said it's possible that all of the contiguous 48 states will see the average price at or below $3 per gallon by the end of the year.

The latest forecast from the U.S. Energy Department puts gasoline prices at $3.99 on average for 2022 and $3.51 for full-year 2023.