Gasoline could drop 50 cents/gallon by spring

NEW YORK (Reuters) – U.S. drivers could enjoy a drop of up to 50 cents per gallon in gasoline prices by this spring as high fuel prices and the threat of a recession force them to conserve, experts said on Wednesday.

U.S. gasoline supplies hit a near-14-year high of 227.5 million barrels last week, helped by falling demand for the fuel, the U.S. Energy Information Administration said on Wednesday.

“Gasoline stocks are continuing to increase and it implies that people are probably cutting down on gasoline consumption — a result of the weakening economy,” said Phil Flynn, an analyst at Alaron Trading in Chicago.

U.S. gasoline demand over the last four weeks only averaged about 1 percent more than the same period last year, the EIA said. Demand growth for the fuel has typically averaged about 1.5 to 2 percent a year and has been one of the major drivers of global oil markets.

“Something dramatic is occurring with consumer driving habits,” Geoff Sundstrom, a spokesman for AAA motor club, said in a telephone interview. “These numbers, if sustained over next couple of weeks, should set the stage for a reversal of price forecasts.”

He said U.S. gasoline prices in the spring could fall 50 cents a gallon from Wednesday’s $2.98.

Reuters