Buffalo, N.Y. (WBEN) - After weeks of drastic rises in gas prices across Western New York and the rest of the country, there has finally been a dip in the average price for a gallon of regular gasoline at the pumps.
According to AAA on Tuesday, the average price for a gallon of gas in New York State was listed at $4.88 a gallon, which is down from $4.95 per-gallon just one week ago. In the Buffalo-Niagara Falls region, gas averaged out at $4.81 per-gallon, which is down from last week's average of $4.85 a gallon.
GasBuddy said Tuesday the average price for a gallon of gas in Erie County was at $4.80 a gallon, with Niagara County averaging $4.73 per-gallon, and the lowest average for a gallon of gas in Western New York being in Chautauqua County at $4.66.
Across the nation, gas prices continue to fall over the past few weeks, with prices averaging $4.80 per-gallon as of Tuesday. That is down eight cents a gallon from just one week ago.
The good news for drivers at the pump is that downward trend is likely to continue for a little while.
"Potentially accelerating [Tuesday], oil prices plummeting by nearly 10% with a barrel of West Texas intermediate crude oil under $100 a barrel, the wholesale price of gasoline plummeting nearly 30 cents a gallon. So the downward move could accelerate with [Tuesday's] losses, should they stick, but for now, prices have declined and likely will continue to do so over the next few weeks," said Patrick De Haan, Head of Petroleum Analysis for GasBuddy.
While it's a nice sight to see for many drivers at the pumps, the primary reason for the drop in gas prices lie with the fears of a recession.
"Crude oil has dropped below $100 a barrel here the day after Fourth of July on July 5, and it's all due to worries about a recession coming," said Chief Oil Analyst with OPIS (Oil Price Information Service), Denton Cinquegrana. "And also the dollar is really, really strong, so I think that's playing a role, as well."
"Generally, when we move into a recession - should we get there - demand for oil plummets. And if this recession is global, we certainly could see a massive drop in consumption," added De Haan. "That is sparking panic that demand could plummet, and that's causing much of the sell off [Tuesday]. But in addition, we've seen gasoline supply rise for the last two-straight weeks, as refineries have finished up maintenance. That's certainly good news that supply is finally increasing, along with these recession fears, is causing prices to tumble."
While it's not likely we'll see a rapid decline in gas prices, similar to the increase in prices that was seen weeks ago, it may see prices go down as much $0.20-to-$0.25 over the next few weeks. That is, of course, if nothing else disrupts the current trend.
"If we don't have a major hurricane, say for example, hit between the swath of the country between, say, New Orleans and Corpus Christi, Texas, where most of the refining capacity in the United States currently resides. Or there's some other black swan event that takes place that really takes more oil or products out of the market," Cinquegrana said.
When asked if the current rate could see gas prices dip near or below the $4 per-gallon mark, Cinquegrana believes that would not happen until much later, perhaps once the fall season comes around.
So what could potentially send this trend in the opposite direction, causing gas prices to level off or rapidly increase once more? One factor that always has an affect on gas prices this time of year is the potential threat of hurricanes in the Gulf Coast.
If we do have a major hurricane that takes out some refining capacity in the Gulf Coast area - [This is not] there's a shutdown because of a hurricane in the area and they're able to start a day or two after the storms passes or the storm veers East or West and it's not a threat and refineries could start relatively quickly - it's one of those ones where you worry about if there's a storm that passes over a refinery and shuts it down for weeks because of damage that's done or flooding, etc," Cinquegrana said.
"We are entering, or going to be entering the peak of hurricane season, and, of course, we've heard that it could be an above average year for storms," De Haan added. "My concern is while things look good now, prices have been plummeting, that any economic data that's good could cause reversal. In addition, any major hurricane heading for the Gulf of Mexico could cause further supply disruptions, and that could eventually cause prices to go back up."
In addition to gas prices falling nationwide, the price of diesel fuel is also starting to accelerate its downturn.
"The average price for diesel [is] down about six cents a gallon in the last week to $5.72 [per-gallon]," De Haan detailed. "The decrease that we're expecting will not only see gas prices decline, but also the price of diesel could plummet by $0.25-0.50 should nothing change over the weeks ahead."
