SAN ANTONIO — This spring, drivers are getting a bit of relief at the pump, as the nation’s average price at the pump has fallen 15 cents a gallon in the last month.
Average gas prices have dropped 10 cents a gallon in the last 30 days in Texas and in San Antonio, according to AAA. Even better, the average price of regular gasoline this summer is forecast to be the lowest in three years, according to the Energy Information Administration’s short-term energy outlook.
Barring political turmoil that could affect oil supplies, analysts don’t see much that could contribute to a spike in gasoline prices through the summer months. In its summer fuels forecast, the EIA on Wednesday predicted that the price of regular unleaded gasoline will average $3.63 a gallon for the April through September period, 6 cents a gallon lower than last summer’s average.
The Gulf Coast will see the lowest average in the same time period of $3.47 a gallon, two cents lower than last year’s April-September period.
A confluence of factors is contributing to the good news for drivers, starting with a growing supply of crude oil.
“We’re at multiyear highs in supply,” said Brian Milne, a U.S.-based energy editor at Schneider Electric, a French energy management company.
The drilling boom in shale plays, including in South Texas’ Eagle Ford Shale and North Dakota’s Bakken Shale, is pumping up the nation’s supply of oil, Milne said.
“It’s big, and it’s a huge reason why prices have been under pressure,” he said. “The expectation is that supply will go on increasing.”
At 388.9 million barrels, the U.S. oil supply is the highest since July 1990.
Crude oil, of course, is the primary component of gasoline. The EIA figures show that gasoline supplies rose by 1.7 million barrels, while analysts had expected supplies to shrink by 1.8 million barrels.
At the same time, demand for gasoline is weak, falling 2.4 percent in the four weeks that ended April 5, according to the EIA, the statistical arm of the Energy Department.
Falling demand for gasoline “has a lot do to with the economic picture,” Milne said.
While the economy is growing, growth isn’t robust, and many Americans have abandoned the search for work.
“The real issue for gasoline is the labor participation rate,” he said. The number of people who are working fell to 63.3 percent in March, the lowest level since 1979.
Almost 500,000 people stopped working or stopped looking for work from February to March, according to Labor Department figures released on April 5. John Mayes, a senior consultant at the energy consulting firm Turner, Mason & Co. in Dallas, said Corporate Average Fuel Economy (CAFE) standards for fuel efficiency are another reason why demand for gasoline is weak and prices haven’t jumped.
“That trend isn’t going to stop for a while,” he said.
CAFE standards mandate gradual increases from about 30 miles per gallon now to 35.5 mpg by 2016 and to 54.5 mpg for the 2025 model year.
“We’ll see mileage improvements well into the next decade,” Mayes said.
The EIA forecasts that there will be a “small decline” in gasoline consumption as improvements in fuel economy “more than offset” growth in miles that Americans will travel through September.
Americans are expected to travel slightly more miles this summer, as miles traveled are forecast to increase 0.4 percent, while gasoline consumption is expected to fall 0.2 percent in the April through September period, the EIA said.
The present decline in gas prices isn’t the usual pattern.
“As we approach the summer driving season, you often get a peak in prices anywhere from March to July,” Mayes said.
After that, he said, prices usually decline through the rest of the year, barring political upheaval or disruptive storms.