The American oil and gasoline industry saw a sudden drop in gas prices this past week, to the surprise of many industry experts — and even average American consumers — who expected gas prices to increase as the weather began heating up.
According to a recent Reuters report published on Business Insider, government data revealed that the decrease in oil prices was followed by a decrease in oil and gasoline stocks in the U.S.
Not only do increased tensions in the Middle East typically lead to higher gas prices, since a large portion of American oil comes from this region, but gas prices also tend to rise in the summer — simply because more people are traveling.
Bloomberg Business reports that the Energy Information Administration (EIA) predicted back in January 2015 that Americans would use an estimated 8.71 million barrels of gasoline per day in the first quarter of the year; first quarter reports showed, however, American consumers actually used about 100,000 more barrels of gasoline per day than what was initially predicted.
Considering that the average large American oil refinery only produces about 300,000 barrels of crude oil per day, it’s not surprising that foreign refineries and trade agreements are necessary to sustain consumer needs in the United States. As tensions in the Middle East have increased steadily over the past couple of months, refineries that export large amounts of oil to the U.S. have seen their shipments dwindle.
Additionally, more American consumers have stated that they are planning to take trips this summer. This is likely a direct result of higher employment rates, and it led the AAA to predict in May 2015 that average gas prices would hover between $2.55 and $2.75 during this summer.
As crude oil inventories dipped down last week to around 467.93 million barrels last week, analysts were surprised that gasoline stocks actually rose by 460,000 barrels, according to Business Insider, and the price-per-barrel is just over $63.