Official: Gas prices likely to stay down for summer
Gas prices have gone down lately because of the weakened Euro, which as a result, is strengthening the U.S. dollar. And prices are likely to stay down for the summer, an AAA official said.
“The prices peaked earlier this year in April at $3.82 a gallon,” said Don Redman, a spokesman for AAA. “After April 11, the prices started declining rapidly.”
The national average for gasoline is now $3.54 a gallon — down 19 cents from a month ago and 17 cents from this time last year, according to AAA.
The U.S. Department of Energy originally predicted a national summer average of $3.96 a gallon.
The average price in Louisiana is $3.28 a gallon — down 27 cents from a month ago and 29 cents from this time last year.
The price of crude oil is $82.70 a barrel, and Redman said he does not project crude oil prices going below $80 a barrel.
Redman said market factors include investor confidence, supply and demand, geopolitical unrest and weather. Redman attributes the recent fall in prices to the weakening of the Euro, which is strengthening the U.S. dollar.
“The European market has slowed down significantly,” Redman said.
Those factors include Greece facing a potential default, and banks in Spain and Italy requiring a significant bailout, Redman said.
“It is a very difficult time for Europe,” Redman said. “We are even seeing a decline in demand in China.”
Redman said even though gas prices are down, the U.S. continues to have a “soft economy.”
In February, Mike Right, AAA vice president of public affairs, said gas prices were rising based on fears that Iran — with tension between it and the West increasing — could block the Strait of Hormuz, shutting off access to one of the world’s major source’s of oil.
But Redman said Iran is not a major factor right now but very well could be in the future.
“Market factors are very much based on the news of the day,” Redman said. “A hurricane in the gulf could even be a catalyst for gas prices going up.”
Redman said he does not anticipate prices going up, “but it is always a news driven market.”
Natalie Isaacks, executive director of the Louisiana Oil Marketers and Convenience Store Association, said with prices down convenient stores are able to get a better profit.
Currently, there are 3,300 convenient stores with 33,000 employees in Louisiana, Isaacks said.
Isaacks said there are different factors that make up the price of a gallon of gas.
Isaacks said crude oil makes up 67 percent of the price of a gallon of gas, taxes are about 11 percent, refining is 12 percent, and post refinery, which includes transportation and distribution costs, is 10 percent. Isaacks also said 38.4 cents of a gallon of gas are federal and state taxes combined.
Kaylen Fletcher, public relations manager at Lake Charles/Southwest Louisiana Convention & Visitors Bureau, said lower gas prices will be a relief for tourism in the area.
“We are definitely a driving market tourist destination,” Fletcher said. “Because we are only two hours away from Houston and other big cities like Lafayette and Baton Rouge, gas prices definitely effect tourism, especially for attractions like the Creole Nature Trail. Just the fact that gas prices are going down, tourists will have more money to spend for food and other attractions in Southwest Louisiana.”
Redman said the states paying the most for gas is Hawaii, $4.47; Alaska, $4.40; Washington, $4.14; California, $4.10; and Nevada/Michigan, $3.89.