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Gasoline pump prices in the U.S. are poised to drop to the lowest since February 2011 by New Year’s Eve as supplies increase more than demand, providing a lift for consumers in an economy struggling to recover from the deepest recession since the 1930s.
Retail prices will probably sink to an average $3.15 a gallon by Dec. 31 from $3.339, Michael Green, a spokesman in Washington for AAA, the nation’s largest motoring organization, said last week. The highest seasonal inventories in three years are set to rise as plants return from scheduled maintenance. Refining capacity in the fourth quarter will be 410,000 barrels a day higher than last year while demand climbs 10,000 barrels, the Energy Information Administration estimated Oct. 8.
U.S. refiners are making the most gasoline ever for this time of year, having expanded to take advantage of ample domestic and Canadian crude. U.S. oil production grew in September to the highest level since May 1989 as advances in drilling techniques boosted output from shale formations. The U.S. met 87 percent of its own energy needs in the first six months of 2013, on pace to be the highest annual rate since 1986.
“We’re in a longer-term down-trend with retail gasoline prices because of reduced demand, increasing U.S. production of oil as well as increased refining capacity for gasoline,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said last week in a telephone interview.
Retail prices have fallen 25.5 cents since the end of August, as the 2013 Atlantic hurricane season was shaping up to be the first in almost two decades without a major storm disrupting Gulf Coast production. The season runs from June 1 to Nov. 30.