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US Gasoline prices fall, where is the bottom?

US consumers got a break from the slowing economy as gasoline prices extended their 3-month decline, but the cost of filling the tank may soon head back up, a survey said Sunday.

The Lundberg Survey said the national average price of self-serve, regular gasoline was $3.41 on 13 July, down from $3.478 on 22 June, and from $3.615 a year ago.

That decline was the 6th straight in the survey of 2,500 gas stations, which comes out every other 3rd week.

Gasoline prices have fallen 14% from a recent peak of $3.967 gal set on 6 April, the record high is $4.112 set on 11 July 2008.

Trilby Lundberg, who conducts the survey, in an interview said prices may soon enter a period of “comparative stability,” reflecting crude oil price trends and the summer driving season.

She added that there is “no strong reason” to expect prices to keep falling toward $3.00 gal in the US

“The retail price may well have bottomed out,” Ms. Lundberg said. “Crude Oil prices turned around during the period, and we are in our seasonal period of higher consumption. Lower prices are also an incentive for consumers to drive more, including to work.”

There are countervailing forces that could tend on their own to push prices lower or higher.

The USD rose to a 2 yr high in July against the Euro and a nearly 2-yr high against a basket of currencies. A rising “Greenback” often causes the price of USD-denominated commodities such as Crude Oil to decline.

On the other hand, the price of US Crude Oil (WTI), which Ms. Lundberg says “dictates more than any other factor what happens to gas prices,” has risen nearly 13% from its recent low on 28 June, settling Friday at 87.10 bbl. That price had been as high as 110.55 as recently as 1 March.

Gas prices could also rise if Iran follows through on its renewed threat to close the Strait of Hormuz, through which 40% of global sea-borne Crude Oil exports passes, in retaliation for Western sanctions on its Crude Oil exports.

The lowest average price for a gallon of unleaded gas in the lower 48 states was $3.00 in Jackson, Mississippi, and the highest price was $3.78 in Chicago, Ms. Lundberg said.

Diesel fuel prices also fell in the latest 3-week period, dropping to $3.7272 from $3.7783.

The Lundberg Survey HQ’d Camarillo, California.