Fuel prices likely to fall

By Palm Beach Business.com

DELRAY BEACH — Gasoline prices are down slightly everywhere — except Florida.

The U.S. Energy Information Administration’s latest weekly report found the national average for a gallon of regular coming in at $2.637, down from $2.647 a week ago. A month ago, gasoline was averaging $2.463 a gallon, which happens to be the low point for the summer.

In Florida, however, the average rose to $2.608 a gallon from $2.578 a week ago and $2.465 a month ago.

In Palm Beach County, AAA found regular averaging $2.725, up from $2.717 a week ago and $2.594 a month ago. Palm Beach County continued to have the dubious distinction of having the most expensive gasoline in the state.

Diesel nationally jumped over the past week to $2.652 from $2.625 and $2.496 a month ago.

In the near term prices are likely to fall.

Crude oil, not long ago over $70 a barrel, settled Monday at $66.75, pushed down by the continuing recession and dampened demand. Gasoline futures likewise have dropped about a dime, although rallying by a penny to about $1.95 a gallon.

AAA noted that according to the U.S. Dept. of Energy, consumer demand for gasoline remains well below both the three-year average and 2008 levels. Additionally, Retail Fuel Watch reports that "there isn’t much to cheer about because the numbers for diesel fuel, (a leading indicator of economic improvement) don’t point to an economic rebound."

“Conflicting forecasts on oil demand for the remainder of the year have dampened the favorable outlook on the economy that pushed crude oil prices into the $70-plus range per barrel,” said Gregg Laskoski, managing director of public relations, AAA Auto Club South. “The rate of increase for retail fuel prices has flattened and that is reflected in the national average price of gasoline as well as in the average prices for Florida ... . Should hurricane season deliver any substantive damage, retail price volatility could accompany it.”  

The Federal Reserve also weighed  in on the subject, since rising fuel prices seem the most likely source to spark inflation. Its conflusion: “substantial resource slack is likely to dampen cost pressures.”

In other words, prices aren’t like to rise substantially because the demand just isn’t there.