US gasoline pump prices at 11-month low in time for holiday shopping
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[December 06, 2023] By
Shariq Khan
(Reuters) - U.S. gasoline prices are the lowest they have been since
January and by Christmas could fall below $3 a gallon for the first time
since 2021, analysts said, which should boost consumer confidence during
the holiday shopping season.
The national average price for a gallon of gasoline stood at $3.23 on
Tuesday, down 15% since mid-September, data from the motorist group AAA
showed. Lower pump prices have given American consumers some relief from
inflation and left more cash for discretionary spending.
"Gas prices being down this year has allowed me to invest more into my
small business than I could last year," said Macey Ropes, a tie-dye
clothing store owner in Lafayette, Indiana.
Tamer fuel bills have also helped her set aside money for personal
shopping and travel around the holidays, she said.
Gasoline prices averaged $3.008 a gallon in Indiana on Tuesday, almost
half a dollar cheaper than last year.
Prices have softened with benchmark global oil prices, which settled on
Tuesday at their lowest since July as traders worried about China's
economy. Oil prices have fallen despite fresh oil supply cuts announced
on Thursday by OPEC+, the Organization of the Petroleum Exporting
Countries and its allies.
Global oil supplies are less strained than they were in the months
following the start of the war in Ukraine.
The cost of crude is the biggest component in retail gasoline pricing.
U.S. West Texas Intermediate crude futures settled at $72.32 a barrel on
Tuesday, down about 10% this year.
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A nighttime view of Marathon Petroleum's Los Angeles Refinery, which
processes domestic & imported crude oil into gasoline, diesel fuel,
and other refined petroleum products, in Carson, California, U.S.,
March 11, 2022. Picture taken with a drone. REUTERS/Bing Guan/File
Photo
U.S. refiners have lifted gasoline output since last year, helping
to build inventories in recent months.
Total U.S. motor gasoline inventories stood at 218.18 million
barrels as of Nov. 24, 2% higher than a year ago and the highest for
this time of the year since 2020, according to data from the Energy
Information Administration.
The national average price of gasoline is set to decline up to half
a cent daily through the end of year. This could bring it below $3 a
gallon for the first time since early 2021, said Andrew Gross, a
spokesperson with the American Automobile Association.
Declining gasoline prices could boost the consumer confidence index,
which rose for the first time in November after three consecutive
months of declines.
"It is argued that gasoline rising towards $4 a gallon gasoline
hurts consumer psyche, so a drop towards $3 should help keep it
strong" said John Kilduff, partner at New York-based Again Capital.
(Reporting by Shariq Khan; Editing by David Gregorio)
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