NEW YORK (MainStreet) -- U.S. gas prices, as measured on a regional basis, continued to slide this week, offering a sliver of hope for Americans that their commute to work or drive over to grandma’s house this Sunday won’t ding them in the wallet.
While gas prices are in general decline, the larger picture shows a heavier burden for U.S. drivers.
According to the EIA, gas prices have risen, on average, from $3.25 since December 31, 2012 to the $3.61 figure the EIA cites this week.
That’s nowhere near the $4.00 per gallon estimate that many analysts had forecasted for the summer of 2012. In 2011, gasoline prices hit $3.98 per gallon only after the price of crude oil skyrocketed to $140 per barrel.
Right now, the price of oil is down to $84 per barrel, leading economists to surmise that prices at the pump still have plenty of room to decline this summer, barring an escalation in geopolitical tensions with Iran or another major round of quantitative easing pushing the dollar down and starting another commodoties rally.
The fundamental supply and demand picture has worsened, too, in addition to the macroeconomic forces. Oil is down on reduced global demand, and continuing worries over the European debt situation. Consumers may not realize it, but one of the biggest reasons they’re pocketing more savings at the gas station these days is the debt picture in Greece and Spain.
Contributing to the decline in gas prices are softening economies in the U.S. and in China, leading to lower demand for oil and gas from businesses and consumers. By and large, low demand for oil and gas drives prices for those commodities downward, just as robust demand for oil and gas pushes prices upward.
That’s what we’re seeing now. All it takes for another week-to-week decline in gasoline prices is a sketchy U.S. jobs number, a soft Chinese manufacturing report, or a lousy consumer sentiment figure in Germany.
All those trends are in play now, and that’s why we’re seeing lower gasoline prices this week, and it's a trend that could continue throughout June.