American gasoline prices prior to Labor Day lowest in 12 years

EIA forecasts US regular gasoline prices will decline to an average of $1.95/gal during the fourth quarter of 2016

Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update

The US average retail price for regular gasoline was $2.24/gal on Aug. 29, the lowest price on the Monday before Labor Day since 2004, and 27¢/gal lower than the same time last year, according to the US Energy Information Administration.

Lower crude oil prices are the main factor behind falling U.S. gasoline prices.

Lower crude oil prices reflect continued high global crude oil and petroleum product inventories and increased drilling activity in the US.

The US average retail gasoline price increased 51¢/gal since the recent low point in mid-February, when gasoline prices averaged $1.72/gal. The rise in gasoline prices was the result of higher crude oil prices and strong demand during the summer driving season.

On a regional basis, average gasoline prices range from $2.59/gal in the West Coast region to $2.01/gal in the Gulf Coast region.

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The West Coast, particularly California, has the highest gasoline prices among states surveyed in EIA’s weekly Gasoline and Diesel Fuel Update, which is the result of a tightly balanced gasoline market, tighter environmental specifications, and higher taxes in West Coast states.

As of Monday, Aug. 26, gasoline prices averaged $2.71/gal in California and $2.74/gal and $2.75/gal in Los Angeles and San Francisco, respectively.

The Gulf Coast region, where much of the nation’s petroleum refinery capacity is located, continues to have some of the lowest-priced gasoline in the nation, averaging $2.01/gal for the region and $1.97/gal in Houston.

As fall approaches and US driving decreases, lower gasoline demand, shifts to less costly winter fuel specifications, and reduced crude oil purchases by refineries undergoing seasonal maintenance have the potential to put downward pressure on crude oil and gasoline prices.

In the August Short-Term Energy Outlook, EIA forecasts US regular gasoline prices will decline to an average of $1.95/gal during the fourth quarter of 2016 and will average $2.06/gal for 2016.