Retail gasoline in the U.S. fell to the lowest level in a year as refineries restored production and stockpiles rose to an eight-month high, blunting criticism of President Barack Obama’s energy policies.
Regular gasoline dropped 9.5 cents yesterday, or 2.8 percent from a week earlier, to $3.254 a gallon, the lowest since Dec. 19, 2011, according to data posted on the Energy Department’s website. Crude prices, by comparison, are up 2.2 percent from a week ago in New York.
“Retail gasoline has been falling faster than crude prices have,” David Hackett, president of independent fuel consultant Stillwater Associates in Irvine, California, said in a telephone interview. “The real story here is that gasoline inventories have built across the board.”
Prices at the pump rose as high as $3.878 in September, stoking debate over Obama’s policies in the months leading up to this year’s U.S. presidential election. Retail costs are down 16 percent since then, with demand for gasoline lagging behind pre- recession levels, U.S. refineries coming back on line after disruptions, and domestic crude production rising.
The U.S. is riding a technology known as hydraulic fracturing, or fracking, to produce an increasing proportion of its domestic needs. Fracking, which uses pressurized water to drive gas and oil from shale rock, has helped America meet 83 percent of its energy needs in the first eight months of this year, the highest annual level since 1991, Energy Department data show. An intelligence advisory panel said last week the nation may achieve energy independence in as little as 10 years.
Gasoline supplies in the U.S. increased 2.4 percent in the week ended Dec. 7 to 217.1 million barrels, the highest since April 6, the Energy Information Administration said Dec. 12. They climbed another 1.9 million barrels, or 0.9 percent, to 219 million in the seven days ended Dec. 14, according to the median of seven analyst estimates before an Energy Department report tomorrow. It would be the highest inventory since March 30.
U.S. gasoline consumption fell 1.2 percent to 8.54 million barrels a day in the four weeks ended Dec. 7 and is down 8.1 percent from the same period in 2007, before the worst global recession since World War II, according to the Energy Department.
Consumption peaked at 9.68 million barrels a day during July 2007, according to the four-week average data from the Energy Department. Demand slipped to an 11-year low of 8.04 million during February.
Retail gasoline fell in every region of the U.S. this week. The Midwest had the biggest drop, declining by 14 cents to $3.144 a gallon, the Energy Department said.
“Whatever refinery problems they had in the Midwest got solved last week,” Hackett said.
CVR Energy Inc. (CVI)’s Wynnewood refinery in Oklahoma was starting equipment Dec. 7 after a maintenance turnaround, a notice to federal regulators shows. Phillips 66 (PSX) also finished a turnaround Dec. 10 at the Borger, Texas, refinery, which delivers refined products by pipeline to markets in West Texas, New Mexico, Colorado and the Midcontinent.
Falling gasoline prices, along with rising home values and job growth, prompted more Americans last month to say the world’s largest economy will improve than at any time in the past decade. Lower gasoline prices may help cushion the blow if U.S. lawmakers agree on a deal to raise reduce government spending and raise taxes for the wealthiest Americans.
When U.S. gasoline prices rose before the U.S. summer driving season, Republican challenger Mitt Romney in March referred to the head of the Environmental Protection Agency and the secretaries of Energy and Interior as the “gas-hike trio.” The American Energy Alliance, funded in part by oil companies, criticized Obama in a television commercial titled “Nine Dollar Gas.”
The U.S. is among the nations feeling the least pain at the pump, with a gallon of premium gasoline costing Americans 3 percent of their daily income in October, 55th out of 60 nations, according to data compiled by Bloomberg.