LAWRENCEVILLE - As Americans prepare to enter 2009 they'll have to think back nearly five years to recall the last time fuel prices were as low as they are now.
With the national price for a gallon of unleaded gasoline hovering around $1.60 and that price even lower in metro Atlanta at $1.49, the main reason for the decline, according to the nation's largest travel agency AAA, is simple - falling consumer demand.
According to Tom Kloza, the chief oil analyst for the New Jersey-based Oil Price Information Service, that demand is estimated to be 3 to 5 percent below what it was a year ago. And AAA says that trend alone should keep prices where they are in the coming weeks.
"AAA remains reasonably confident the future trend for retail gasoline prices will be lower and not higher in the coming weeks," said Geoff Sundstrom, the group's director of public relations. "It also has to recognize that although the markets will be watching and reacting to events in the Middle East, there are no globally significant energy assets at risk in this fighting and demand for oil and gasoline remain extraordinarily weak worldwide."
Because of weekend attacks by Israel into the neighboring Hamas-controlled Gaza Strip, the price for a barrel of crude oil jumped Monday from a Friday close of $37.71 to just over $40. Before Friday's rally, a barrel of crude had traded last week as low as $33.35. In the last year, the price has fluctuated between the $33 low and a high of $147 reached in July. At Tuesday's close, the price for a barrel of crude remained just below the $40 mark, closing at $39.19.
"Gasoline prices are at the lowest level we've seen since February 2004," AAA's Gregg Laskoski said. "It remains to be seen whether the Organization of Petroleum Exporting Countries' pronouncements have actually materialized, because it does not appear that any
substantive change has occurred on the supply side."
OPEC, which supplies one-third of the world's oil supply, announced in early December that it was curtailing daily production by 2.2 million barrels starting in January. According to Laskoski, OPEC members are speculating about another reduction in production prior to their Jan. 19 meeting in Kuwait City. On Tuesday, the oil services company Petrologistics reported that OPEC reduced its daily production so far in December by 400,000 barrels. The reduction coming next month will be the largest ever announced by the group.
Sundstrom said in his daily fuel report Monday that the national average price for a gallon of unleaded gasoline could reach as low as $1.50 a gallon between now and the end of February.