"After 54 consecutive days of increases, the national average for regular unleaded retreats slightly, dropping a few tenths of a cent the past two days. For the week, though, the national average is up a penny to $2.68. Oregon's average is up four cents for the week to $2.81, and dropped a tenth of a cent Sunday night, and held steady from Monday to Tuesday."
AAA Oregon Public Affairs Director Marie Dodds says, "The nearly two-month-long run-up in gas prices may finally be giving way to economic realities. Prices have been rallying largely on investor hopes of an economic recovery."
A World Bank forecast of global economic growth predicted the global economy would shrink at a rate of 2.9% for 2009, the worst such contraction on record. Dodds says, "This forecast reminded investors of the depth of the recession and that market fundamentals don't support the dramatic increases in oil and gas prices. Still, we've had just enough positive economic news to create market momentum. One such sign was last week's report from the Federal Highway Administration showing that Americans drove six-tenths of a percent more this April compared to April 2008."
Crude oil prices have also fallen, from $70 last week to $67 today. Where oil and pump prices head from here is largely dependent on the economy and investor perception of the pace of economic activity. Dodds adds, "If investors feel the economy will soon improve, the price of oil and gasoline will rebound. But more bad economic news would make it difficult for the markets to justify a runaway rally in prices."
Another major development that may impact oil prices is the ongoing post-election unrest in Iran, OPEC's second largest producer. Protests sparked by suspect presidential election results continue there. If the unrest persists, investors may become nervous about long term oil supply issues. However, the significant glut of oil supplies may help temper the impact of such geopolitical events, which historically have caused price spikes in the short term.
