Gasoline prices dropped 2.4 percent in April. Analysts said they expect further declines amid a sharp drop in crude oil prices.
Gasoline prices dropped 2.4 percent in April. Analysts said they expect further declines amid a sharp drop in crude oil prices. Amy Sancetta/AP
As the beginning of the summer travel season draws near, something strange is happening at the gas pump — prices are going down.
Ordinarily, gasoline prices go up this time of year and stay up for the summer. This, however, is no ordinary year.
"A few weeks ago, they were telling us we would be paying $4 a gallon, but right now it doesn't look that way," says Dan Amundsen. The price at his Union 76 station in suburban Seattle is going down.
Across the country prices, are falling. Ten days ago, the nationwide average price for regular gas was about $2.90 a gallon. Since then, it's dropped more than a nickel, and experts say it is likely to fall even further.
Why? In short because the cost of crude oil is declining.
Andrew Delmege of the American Automobile Association says the price of crude has fallen rather sharply — largely because of concerns about the European economy.
"Markets are reacting to the loss in value of the euro compared to the dollar," Delmege says. "As the dollar gains strength, oil prices drop because oil is priced in dollars."
Another oil and gas expert, Phil Flynn of the commodities trading firm PFGBest, adds that the global economy is not likely to grow as fast as previously forecast, so the demand for oil will be less and so will be its price per gallon.
"My fearless forecast is national average could go down below $2.70 and maybe even lower," Flynn says. "I'm talking about a substantial drop at the pump.
That's good news for consumers, the domestic travel market and the overall U.S. economy.