Chicago Gas Prices Continue To Drop

After a year of abnormally high and even record breaking gas prices, Chicago drivers have seen a reprieve the past four months.

Since the beginning of September, local gas prices on average, have fallen around 90 cents a gallon for regular unleaded gasoline.

According to AAA’s Fuel Gauge Report, prices have plummeted from $4.48 per gallon to $3.57 per gallon, while ChicagoGasPrices.com has gas declining from $4.37 per gallon in early September to $3.46 a gallon Monday.

In December, fuel prices have dropped around 20 cents a gallon according to both AAA and ChicagoGasPrices.com,  making area gas prices around 17 cents lower a gallon than prices a year ago. Nationally, fuel prices are an average 30 cents per gallon lower than this time last year.

“The reason for the downward trend that started a few months ago is a combination of decreased demand, increased supplies and the switchover to less expensive winter-blend fuels.” said AAA Chicago spokesperson Nick Jarmusz. “It was aided last month by the economic uncertainty resulting from the ‘fiscal cliff’ debate in Washington.”

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Patrick DeHaan, petroleum analyst for GasBuddy.com, a website which tracks gas prices across the U.S. has a similar explanation for the lower prices to Jarmusz but is wary of what the future holds.

“Gas prices are much lower than last year at this time- certainly a better
situation than the opposite,” says DeHaan. “It bodes well, but it doesn’t negate the possibility of $4+ gas, which is still likely. Prices may be lower as inventory piles up regionally. The declines are due to seasonally lower demand, cheaper winter gasoline, and higher inventories as demand wanes.”

But what kind of prices will motorists see for the rest of 2013?

GasBuddy’s Fuel Price Outlook 2013 predicts a year of gas prices similar to last year with Chicago area motorists paying an average of $4.35 to $4.60 per gallon. That’s between 65 cents to a dollar more than the predicted national averages for the year.

AAA’s Jarmusz is more hesitant to offer any long term prognostications.

“As you know, it’s difficult to predict gas prices, even in the short term,” explains Jarmusz. “Right now, we anticipate that the current trend will continue, as we anticipate demand to remain low, supplies to remain high, and the fiscal debate in Washington continues.

But Jarmusz has concerns about disruptions to fuel supplies which happened several times during 2012, helping propel Chicagoland gas prices  to become the highest in the country at certain points during the year.

“Prices will inevitably go up a bit in the spring/summer, as we switch back to the summer blend and the travel season starts, but the real volatility usually comes on the supply side,” said Jarmusz.  “Any disruption in supply, whether that be caused by a deterioration of the situation in the Middle East or refinery and/or pipeline issues, could cause prices to spike up.”

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