Patrick Dehaan, senior petroleum analyst at Gas Buddy, has looked at the key factors that are pushing prices lower. "We are seeing declines now, but the decrease should pick up steam in mid-September," Dehaan said.
- A strong dollar makes oil more expensive for foreign buyers, weakening overall demand and sending prices lower.
- The anticipation of Iranian oil hitting the markets has added to the drop in oil and gas prices. Once Iran is able to sell its oil freely, the country will start unloading the roughly 20 million barrels it has in storage. Iran can also begin producing 400,000 barrels a day from its existing oil fields. After a year of rebuilding and repair, Iran could be producing 500,000 barrels a day.
- The economic slowdowns in Europe and China will likely trim demand for gasoline in the global market.
- Gas prices typically fall after the summer driving season in the U.S. Last year, average prices fell by more than a dollar between August and Christmas. The typical decline in the autumn is between 35 and 65 cents.
- Gas stations can begin selling cheaper winter-grade gasoline on September 15. Gas is more expensive in the summer due to EPA rules requiring the sale of lower-volatility gasoline, which produces less ground-level ozone. It costs refiners about 25 cents a gallon more to make summer-grade gasoline.
- In the fall, gasoline production slows in the U.S. as oil refineries undergo maintenance. While a decline in supply usually leads to an increase in prices, there's also a decline in demand once summer ends. This year, the fall in demand is expected to outweigh the fall in supply, adding more downward pressure on prices.
Oil traders are signaling lower prices in the futures markets. Implied spot prices for some major gasoline markets in November and December are already trading at around $1.25 a gallon, according to Tom Kloza, global head of energy analysis at Oil Price Information Service.
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The regions that will experience the lowest prices will be the Southeast, the Great Lakes, Oklahoma, Texas, the Gulf Coast and, toward mid-winter, the Rocky Mountains.