US gas prices rise have finally been reversed. Thanks to slightly more conducive global situation, rise in production of oil in Saudi Arabia and Libya and early hopes of re-opening of refineries on the East Coast of the United States, gasoline prices have shown signs of decline for the first time in the election year in mid-April.
There is something to cheer about as normally its prices rise in spring, and often peak in May.
The fall came after four long months of surge. It came as a big sigh of relief for all, especially when the economy was not in the pink of its health. Earlier, there was already fear in the market that prices might soar to all time high and was feared to hit $5 by the end of the year.
Prices have dropped by six cents over past two weeks to a national average of $3.88 per gallon on Friday––down from $3.94 per gallon earlier.
Experts are of the view that it could fall more next week. Those purchasing at the pump are paying less than they did a year ago.
According to Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, gasoline prices are expected to drop to just above $3.80 by late next week.
High crude prices, that have averaged $104 per barrel this year, was responsible for constant rise in gasoline prices. It even rose to $110 as the West tightened sanctions forcing it to abandon its nuclear ambitions. Oil prices went up by $15 per barrel following fears that retaliation by Iran could disrupt supply in the Middle East.
However, that apprehension has subsided somewhat following ‘positive’ talks with Iran on its nuclear programme in Istanbul early this month.
In the United States itself potential buyers for two of its three closed East Coast refineries have increased hopes of early opening.
Oil prices have fallen to $103.05 per barrel, down from a peak of $110.55 on March 1.
Not only that consumers in the United States have gone frugal at the gas pump; thus its demand has dropped by about six per cent compared with the same period last year. This is expected to cut the price of wholesale gasoline.
However, analysts say that prices are not expected to plummet. Even if the Iran situation were totally resolved, which appeared unlikely, oil prices would not fall much below $90 per barrel.
They fear that prices could still reverse themselves if hurricanes hit the Gulf of Mexico or tension or fighting escalates in Middle East. Besides, a surge in world economic growth could increase demand as well as prices.