Welcome news for motorists.
Gas prices continued to hold steady just three weeks into the new year, hovering at $3.29 on Friday, compared to the same three week period in 2012 where prices at the pump increased 10-plus cents per gallon. Friday’s national average price for a gallon of regular unleaded gasoline is two cents less than one week ago, six cents more than last month and nine cents less than one year ago. While prices have stabilized and even dropped in many places, there are still a few states in the Northeast paying more than last year (including Pennsylvania, New Jersey, and the District of Columbia) due to the supply aftereffects of Hurricane Sandy last fall. However, Maryland’s average price of $3.39 per gallon has dropped three cents from a week ago and is on par with last year’s cost.
After trading much of the week in the $90 to $95 per barrel range, crude oil crossed the $96 per barrel mark on Thursday, the highest price since last September, but settled just slightly lower at $95.49 per barrel. Rising prices came on the heels of positive U.S. economic news – U.S. jobless claims fell to the lowest level since January 2008 last week, the Labor Department said, and construction of new U.S. houses jumped more than 12% in December – both of which indicate the U.S. economy continues to grow and demand for energy will pick up. Positive economic growth reported from China in the fourth quarter, a sign of potential demand growth, also supported crude oil. Another factor sustaining crude oil prices this week is the Algerian hostage situation. Rebels had been holding hostages at a natural gas plant for much of the week when Algerian forces launched a raid to rescue the hostages, which turned deadly. Traders are keeping a steady watch on the situation and the effect on the stability of the country, as well as the region. The country produces approximately 1.2 million b/d of crude oil.
"The price at the pump remains stable, even dropping in some areas, which is a welcome contrast to last year at this time when we saw double-digit increases to start the new year," said Christine Sarames Delise, Public Affairs Specialist for AAA Mid-Atlantic. "Late week crude oil increases due to domestic and international issues could impact gas prices slightly in the coming days. However, AAA Mid-Atlantic believes prices will remain stable throughout the winter months ahead of the seasonal increase during the spring months."
Eyes will remain on the Algerian hostage situation and potential turmoil in the region, and its impact on crude oil prices. While gas prices are expected to remain relatively stable for the remainder of the month and into February, such international conflict could send crude oil prices upward for the short-term and gas prices would likely follow suit. Should the situation resolve itself with minimal impact to crude oil prices, increased prices at the pump aren’t expected to rise significantly until early spring.