Every year, as the weather improves in the spring, gasoline prices start to creep higher. But this year, could it be that the pattern is broken?
The recent run-up to record levels — California is now paying an average of $4.26 per gallon — might be halted, even reversed, if wholesale oil prices continue to fall as they did today. As of Monday, according to Department of Energy data, prices in New England, the Midwest, and the West Coast were over $4 a gallon.
In those states, a car that averages 25 mpg will cost you 16 cents per mile or more in gasoline cost alone. The lowest regional average price was in the Rocky Mountain states, at just $3.70. And the cheapest single state was Wyoming, at $3.61.
Today, briefly, the price of a barrel of light crude oil fell below $100 for the first time in several weeks. But why? There’s generally a lag of several weeks between oil-price declines and falling pump prices, as the cheaper oil has to work its way through the refining and distribution process.
And no decline in oil prices is ever particularly simple to explain. In aggregate, more expensive gasoline cuts consumption as car owners drive less. That reduction in demand, in theory, reduces the price over time. Poorer and more rural drivers, particularly in the Southeast and West–where driving distances are longest–have indeed cut back on driving in recent months as gas prices have risen.
Data from the Department of Energy and other sources suggests that gasoline consumption is 2 to 4 percent lower this year compared to a year ago, despite a slightly better economy this year. Last year at this time, gasoline was fully $1 per gallon cheaper.
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Most analysts agree that continuing demand for energy in China will outstrip any reductions in gasoline use in the United States and Europe. China is the world’s largest vehicle market, at 18 million units last year against roughly 11 million in the States.
All those vehicles may travel shorter distances than do cars in the U.S., but they’re still burning gasoline. In other words, U.S. drivers are at the mercy of consumer behavior on the other side of the globe. At least among some analysts, the consensus is that the recent slide in oil prices may lead to a temporary cut in gas prices–but that won’t last.
In other words, gasoline will continue to be as expensive as it is now, or higher, over the long-term. So enjoy those cheaper gallons now, while you can. They may not last.
Written by John Voelcker, this article originally appeared on Green Car Reports, one of VentureBeat’s editorial partners.