Gas prices dip before holiday; but above year ago
asoline prices have dipped 4 percent — nearly 18 cents per gallon — since flirting with $4 per gallon earlier this month. At $3.809 per gallon, however, the national average is still $1.05 per gallon more than it was last year.
A survey by auto club AAA showed that the number of people traveling for the holiday should be the highest since the recession.
"They're not going to let high gas prices slow them down," said Patrick DeHaan, senior petroleum analyst at GasBuddy.com, which receives data on gas prices from thousands of drivers around the country.
However, AAA also predicts travelers will spend about 14 percent less than a year ago.
"What they will do is cut back on some of their activities," DeHaan said.
Meanwhile, benchmark crude for July delivery added 36 cents to settle at $100.59 per barrel on the New York Mercantile Exchange. In London, Brent crude fell 2 cents to $115.03 per barrel on the ICE Futures Exchange.
Demand for oil and gasoline has been falling, and a Friday report indicated high gas prices have impacted other facets of U.S. consumer spending. Still, analysts believe investors were cautious about selling ahead of a long holiday break. In February, oil prices shot up more than $7 per barrel as the Libyan uprising escalated over the President's Day weekend.
Fighting continues in Libya and there are other anti-government protests throughout the oil-rich Middle East. In Syria, security forces opened fire on demonstrators Friday, and tribesmen in Yemen said they'd seized a Republican Guard military camp.
Energy experts say Libya's 1.5 million barrels of daily oil exports will remain offline for at least several months. That loss continues to put pressure on other oil producers to make up the difference.
As world oil demand increases, Wall Street is betting that tightened supplies will inevitably push oil close to record levels. Goldman Sachs said this week that benchmark West Texas Intermediate crude will hit $135 per barrel by the end of 2012. Morgan Stanley said Brent will average $120 per barrel this year, while J.P. Morgan thinks Brent will be $130 per barrel in the third quarter.
Oil is down about 12 percent in May and WTI has recently traded in a range of $97 to $101. Pump prices, which tend to lag oil prices, dropped about 3 percent and are now at $3.80 per gallon. Tom Kloza, an analyst at Oil Price Information Services, expects gas to fall to between $3.50 and $3.60 in June.
But a rebound in price later this year close to what in investment banks are forecasting would put pressure on the global economy and squeeze drivers. At those levels for oil, gasoline will likely rise to around $4.25 per gallon, Kloza said.
"That would hurt," he said. "Gasoline prices are at the top of everyone's mind right now."
Consumer gasoline demand already has dropped during the past nine weeks as the national average approached $4 per gallon.
"We've seen some real damage to the consumer's psyche," Kloza said.
In other Nymex trading, heating oil for June delivery added nearly a penny to settle at $3.0014 per gallon and gasoline futures for June delivery increased 2.39 cents to settle at $3.0313 per gallon. Natural gas for July delivery increased 15.8 cents to settle at $4.518 per 1,000 cubic feet.
