Gasoline Price Increase may have reached its Highest Level at $3.92 per Gallon

The increase in gas prices this year seems to be over as the costs fall short of their highest record.

The recent nationwide average of gasoline prices was at $3.92. That rate is lower than the $3.99 average in 2011 and the $4.11 record high in July of 2008.

According to Gasbudddy.com’s senior analyst Mr. Patrick DeHaan, this average at the pump can drop in the early parts of May to $3.70 per gallon. Usually, gasoline prices increase days prior to Memorial Day.

Falling crude oil prices and wholesale gasoline costs plus lower consumer demand are the reasons why pump prices are controlled. West Texas Intermediate, the benchmark for U.S. crude oil prices, recently declined by 1.4% to reach $101.02 per barrel. That lowest level it attained in a two-month period occurred due to new signs of increasing oil inventories in the United States and another WallStreet sell-off.

Recently, the Energy Information Administration made a forecast that gasoline prices may reach an average price of $3.95 per gallon until September and could attain its highest price of $4.01 in the month of May. However, those estimates are based on a $100 crude oil price per barrel.

The EIA predicts a little break in gasoline prices by 2013 at $3.73. That rate is lower by 8 cents compared to the average this year of $3.81. However, it is also higher by 20 cents compared to the prices in 2011.

Brian Milne, an energy editor in Telvent, said that indications of the economy’s slowdown should be able to control gasoline prices in the short term. He further notes that imports of crude oil in China dropped by 6% in the month of March.

Milne also said that many are positive that Iranian conflicts, which contributed to the increase in crude oil prices by almost $15 to $20, may soon ease.

Gasoline prices in several of the country’s most expensive markets including Chicago and Los Angeles have already declined by 12 to 20 cents per gallon. Lundberg Survey’s Trilby Lundberg said that the reduction gives assurance that the market is headed in a downward direction. She added that even if demand increases, there is sufficient supply, plenty of refining capacity and continued assurance from Saudi Arabia that they would compensate for the loss of supply that Iran may create.

Oil Price Information Service Tom Kloza said that gasoline prices may increase on unexpected reports. However, worries of very high prices are baseless. Kloza said that it may be time to call the attention of those who are saying that gasoline prices may surely reach $5.

By: Chris Termeer