Behind The Sound Bite: Gas Prices
Gas prices in Massachusetts have fallen for seven weeks in a row, according to the latest numbers compiled by AAA Southern New England. That echoes a regional and national trend, which may seem counterintuitive, since we are in the heavy summer-travel season, when prices normally rise as families take the to the highways in search of vacation fun. In this edition of Behind the Sound Bite, we decided to look behind the prices at the pump to find out what economic forces are at work.
Where do gas prices stand in Massachusetts?
A gallon of regular unleaded gas at the self-serve pump costs an average of $3.64. That’s down four cents from the previous week and down 32 cents over the past seven weeks of steady declines. The last time prices were this low, it was April.
How does that compare to other New England states and the national average?
Massachusetts gas prices are somewhat cheaper than its immediate New England neighbors. A gallon of regular in Rhode Island will cost you $3.74, more than 10 cents the rate in the Bay State. It’s much more costly in Connecticut, where a gallon currently averages about $3.90. The national average is $3.56
What’s causing gas prices to decline?
It’s a simple case of supply and demand. Demand for gas has dropped and so have prices. In fact, the U.S. Department of Energy reports that the nation’s capacity to refine crude oil into gasoline has reached historically high levels. But the utilization of that refining capacity reached just 86 percent in 2010, which is well below the levels recorded from 1993 to 2005.
What’s the future outlook for gas prices?
We may be in a period of decline, but that’s hardly expected to last, according to the U.S. Department of Energy. Oil markets are expected to struggle to keep up with demand through 2012 because of global demand and slowed growth in production.
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