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How low can it go? Gas price slide should continue, analyst says

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Frank Schultz
October 7, 2013

Wisconsin drivers are paying about a dollar less for every two gallons they pump compared with one year ago, and the news might get even brighter, an industry analyst said.

Gasoline costing less than $3 a gallon already is showing up in some parts of the country, and it's possible places such as Wisconsin could follow suit, said Gregg Laskoski, senior petroleum analyst at GasBuddy.com.

Average retail gasoline prices in Wisconsin fell about 6 cents per gallon in the past week, averaging $3.33 a gallon Monday, according to GasBuddy.com's daily survey of 3,112 Wisconsin gas stations.

Laskoski said his website noted gas at $3.15 a gallon in Kenosha on Monday.

There's nothing at the moment to stop the price slide, Laskoski said in a telephone interview. Factors working to lower prices include:

-- The Middle East—With the prospects of United States military action in Syria fading, there's no conflict in this oil-producing region that threatens the oil flow, Laskoski said.

-- Hurricanes—Tropical Storm Karen fizzled instead of becoming a hurricane over the weekend, which means Gulf of Mexico crude will continue flowing.

The Associated Press reported that more than 60 percent of the U.S. oil production in the Gulf of Mexico was shut down over the weekend as a precaution, but Laskoski didn't see that as a problem.

It's still hurricane season, however, Laskoski noted. Hurricane Sandy didn't hit the U.S. coast until Oct. 29 last year, and sure enough, its massive destruction drove up gas prices.

-- Winter-blend gas—This gasoline formula is already at gas stations. It doesn't have the pollution-fighting additives of summer-blend gas, which makes the winter blend cheaper to produce.

-- Consumers—Prices drop to their lowest levels in the fourth quarter of every year because there's less demand, unless something else happens to cause crude oil prices to rise, Laskoski said

Laskoski downplayed a suggestion in an Associated Press story Monday that the government shutdown was affecting prices as the federal government spends less on gas and that the looming debt-ceiling conflict in Washington, D.C., could make matters worse.

“There is no way to say that the government shutdown is having a direct, discernible impact on retail gasoline prices,” Laskoski said, but he had heard the theory the shutdown put a damper on commodities speculators' interest in crude oil.

The worst-case scenario for the debt-ceiling conflict appears to be that it is not resolved by the Oct. 17 deadline, leading to the United States defaulting on its debt for the first time in history.

The Associated Press quoted a note to investors from Commerzbank in Frankfurt, which said there were no signs of the U.S. budget dispute being resolved, “and this has left investors more wary of risks.”

Laskoski noted that the fourth quarter usually has the lowest gasoline prices of the year, which means that market forces should drive up gas prices in January or February.

“Unfortunately, all good things come to an end,” he said.



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