Global crude oil prices plummeted to the lowest the market has seen in in 27 months to close out September. The price drop only strengthened the case that prices of gasoline will drop at the pump lower than we’ve seen in years, according to a GasBuddy analyst. The GasBuddy analysts also believe that gas prices predicted at the pump next week will only be a preview of what we can expect in November and December.
“We expect nationwide gasoline prices will move to between $3.10/gal and $3.20/gal in November and December,” chief GasBuddy oil analyst Tom Kloza predicted. “The cheapest numbers are likely to occur when refining production recovers. The actual bottom in this current down-cycle may not occur until January.”
“The drop in crude prices have caused some economic jitters, which has pushed the stock market down. Whenever the Dow Jones average goes up or down more than 100 points, oil prices follow in same direction,” senior petroleum analyst Patrick DeHaan told the Detroit Free Press today. “The Saudis cut oil prices. That’s kind of big deal. It weighs on other global oil suppliers to drop prices.”
U.S. and Canadian refiners are also undergoing fall maintenance during the first half of October and equipment is being fixed. Meanwhile, he says, more than a million barrels per day may be sitting idle during this maintenance period. GasBuddy said that this maintenance cycle, coupled with a low growth in demand, contributed to the fall in crude oil prices.
Ethanol prices have also fallen and are expected to contribute to lower prices at the pump. For example, in Detroit where finished gas at the pump has a 10 percent ethanol mix, analysts suggest that gas prices at the pump will fall below $3 as early as Sunday. DeHaan said that because of high corn yields, corn prices have dropped to a five-year low, making ethanol prices plunge.
The Detroit Free Press reported that, in the fall, “gas stations switch from the more expensive, cleaner-burning summer blend of gas to the winter one. While gas prices are known to sometimes fall in the fall, this year the drop is coming several weeks earlier than last year.”
AAA Arizona confirmed that gas prices at Arizona pumps have dropped and are expected to continue to drop. GasBuddy analysts believe two out of three states in America will see gas stations post prices less than $3/gallon this fall.
[Photo via FutureAtlas]