Gasoline prices in state fall 8 cents

Ample U.S. supply, easing Mideast concerns are factors

Arkansas Democrat-Gazette/MELISSA SUE GERRITS 09/22/13 - Regina Mingo fills her car's gas tank at E-Z Mart off Daisy L. Gatson Bates Drive September 23, 2013.
Arkansas Democrat-Gazette/MELISSA SUE GERRITS 09/22/13 - Regina Mingo fills her car's gas tank at E-Z Mart off Daisy L. Gatson Bates Drive September 23, 2013.

Retail gasoline prices in Arkansas have fallen 8 cents in the past week, and industry analysts say they should continue to drop.

Prices are being pushed down by ample supply from U.S. refineries and easing concerns about Middle Eastern oil supplies, said Phil Flynn, an energy analyst with Price Futures Group in Chicago.

“We’re seeing a major selloff in gasoline, and a lot of it has to do with the fact that we are switching to the winter blend,” he said, adding that the United States is producing the most oil it has in about 20 years.

“So you are seeing a lot of oil come back on when, seasonally, oil demand is a little weaker,” Flynn said.

On Monday, the average price of gasoline was $3.25 per gallon in Arkansas, down from $3.33 last week. The national average was $3.47 per gallon, down from $3.52 a week ago.

Gasoline prices are lower than they were this time last year when averages were $3.65 in Arkansas and $3.81 nationally.

And analysts with gas-buddy.com, a website that tracks gasoline prices, said in a news release that they expect retail prices to continue to fall in the next few months.

“Looking forward, we’re likely to see additional relief at pumps in the months ahead, and it’s quite possible that by the time we’re observing Thanksgiving that gasoline prices will be twenty or more cents per gallon lower,” said Patrick DeHaan, senior petroleum analysts for the website, in a prepared statement.

Flynn said many refiners were down for maintenance during the summer and increased their capacity for gasoline.

“U.S. refiners are now getting infrastructure in place to take advantage of this new oil production,” he said.

Diminishing threats to Middle East oil supplies have also softened gasoline prices, said James Williams, an energy analyst and owner of the consulting firm WTRG Economics near Russellville.

Gasoline prices rose a month ago over a potential Western military strike onSyria. Prices are declining now that a strike seems less likely and moves have been taken to eliminate the country’s chemical weapons, Williams said.

“The tension around Syria seems to be easing,” he said. “So there’s a lot less negative news and that’s what’s influencing the price.”

Oil prices have fallen almost 6.3 percent since a two year high of $110.53 a barrel on Sept. 6, The Associated Press reported Monday.

Benchmark oil for November delivery fell $1.16 to settle Monday at $103.59 on the New York Mercantile Exchange.

Brent crude, the standard for international crude that is shipped to some U.S. refiners, fell $1.06 to $108.16 a barrel on the ICE Futures Exchange in London.

Wholesale gasoline prices fell 6 cents to $2.62 per gallon.

Williams said prices are also retreating because of seemingly improved relations between Iran and Western countries and the return of oil supply from Libya after some of the country’s oil facilities were shut down after being targeted by labor groups.

“We could have another 5, possibly 10 cents to go down,” he said. “But the uncertainty in the Middle East makes that more of a guess than a forecast.”

He said that prices could be forced back up if additional conflict arises in Egypt after an Egyptian court banned the Muslim Brotherhood on Monday.

In Egypt, the Suez Canal, which connects the Mediterranean Sea and Red Sea, and the Suez-Mediterranean Pipeline, are major transit points for oil shipments from African and Persian Gulf states to Europe.

About 3.8 million barrels per day moved through the canal and pipeline in 2011, according to the U.S. Energy Information Administration.

Gasoline prices are “more likely to go down than to go up in the short term,” Williams said. “If you can take the concerns about war and supply interruptions out of the Middle East, we could go down much further, but that concern is still there.”

Front Section, Pages 1 on 09/24/2013

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