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Tuesday, January 20, 2015

Lockport area gas prices dropped nearly eleven cents this week, according to AAA East Central’s weekly Fuel Gauge report. The average price of self-serve regular unleaded gasoline, based on reports from 22 stations in the Lockport area, was $2.613, down from $2.728 last week and $3.610 this time last year.

U.S. motorists are paying the lowest average gas prices since April 2009, and the national average is likely to slide below $2 per gallon before the end of the month. The average price at the pump has dropped a record 117 consecutive days, for a total a savings of $1.29 per gallon during this stretch.

The average price at the pump is directly connected to the global price of crude oil, with crude costs accounting for more than half of the price of gasoline. Like pump prices, crude oil prices have also posted multi-year lows due to global supply outpacing demand.  AAA expects the national average to remain below $3 per gallon in 2015, barring any major fluctuations in the global price of crude.

While increased seasonal demand and maintenance at refineries may result in a typical 30-50 cent increase in pump prices this spring, a major global price recovery is unlikely to be the horizon, absent any major market disruptions or geopolitical events. These sustained lower prices would be a result of projected shifts in the balance between global oil supply and demand. This shift has been keyed by increased crude oil production in the United States and Canada and was accelerated by OPEC’s decision this fall to sustain production levels despite declines in the price of crude by electing to allow the market to self-regulate. Crude prices are less than half of what they were six months ago, and sustained low prices will also continue to test the resiliency of countries that rely on oil revenue to fund government services.

The spread between Brent Crude and WTI continues to narrow, and stood at $1.48 a barrel at the close of formal trading on Friday. Less than one year ago West Texas Intermediate was trading at discount of $10 per barrel and the last time Brent fell below WTI was in 2010. WTI closed up $2.44 a barrel at $48.69 at the close of Friday’s formal trading on the NYMEX.

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