Your 401(K) might be in the tank, but soon it might not cost as much to fill up your gas tank.
After oil prices plummeted more than $18 in the past two weeks, some experts are predicting gasoline prices will come down a quarter in the next two weeks and 30 cents by the end of the month. However, unlike the recent oil prices, gasoline prices won’t change overnight.
“We’ve seen wholesale gasoline prices drop 35 cents to 45 cents per gallon, and I would expect at least half of that to be seen at the pump by late next week,” said Tom Kloza, an analyst with Oil Price Information Service, a New Jersey firm that tracks gasoline prices. “Unless, of course, the markets reverse course and advance in a bit of a relief rally.”
According to AAA, the average price for gasoline nationally has fallen 8 cents per gallon over the past week to $3.62. In Texas, average gasoline prices dropped 9 cents to at $3.52. Houston prices are three cents lower than the Texas average at $3.49, a 10-cent drop from over a week ago.
However, Houston prices aren’t droppin like they are in other U.S. cities.
In Missouri, gas prices have dropped 14 cents in a week to settle at $3.40, the nation’s lowest average gas price, according to AAA. St. Louis has seen a 33-cent decline in a week to settle at $3.23, a price Lone Star State hasn’t seen in months.
So what gives? When will Texas drop?
“When the price of oil goes up or down, gas prices are going to follow, but it takes a few weeks to hit retailers,” Sarah Schimmer, an AAA spokeswoman, said. “But we can’t predict the future.”
Forecasting gas prices isn’t a science. It’s more like reading tarot cards.
Typically, gas prices lag a few weeks behind crude oil prices as refineries buy the commodity, transform it into gasoline and then ship to gas stations at a lower cost than the previous inventory, Schimmer said.
But the price also depends on variables such as the type of crude and the distances to and from refinery, she said.
“It does make a difference where it is coming from and the mode at which it is coming,” Schimmer said. “Texas sees the benefit of having many refineries in the area. Because of that, Texas always has competitive prices.”
It also depends on what type of crude oil is being refined.
West Texas intermediate has dropped steadily over the past two weeks to settle around $82 per barrel, but brent crude and light Louisiana crude from the Gulf has held around $100 per barrel. More expensive crude means a more expensive price at the pump.
“There really is a caste system among U.S. refiners – some are privileged and advantaged to have cheap crude, and some are not,” Kloza said.
However, many Texans might not have noticed, but prices have already changed at the pump.
In May, Texas prices topped out around $3.80, but prices have had a slow tumble to the $3.50 range in past two months, Schimmer said. While the savings might not be enough for a new white iPhone 4, it might be enough for a burger at your favorite fast-food joint.
“It’s not the saving of the economy but it definitely will put a smile on a few consumers’ faces,” Michael Lynch, president of Strategic Energy & Economic Research, said to the Associated Press.
But for how long the prices stay low is anyone’s guess.
“In the short time, consumers might see a difference,” Schimmer said. “We are heading into the end of summer and toward Labor Day weekend, so prices might go up then.”
