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Old-fashioned supply and demand drives down gas prices

By Palm Beach Business.com

DELRAY BEACH — Those fears of $5 a gallon gasoline this summer appear to be premature, as gasoline dips nearly a dime below year ago prices at the pump, according to Monday’s report from the U.S. Energy Information Administration.

A gallon of regular averages $3.77 in Florida, down from $3.856 a week ago and $3.898 a month ago. That’s 9.4 cents less than it average a year ago, according to EIA.

Nationally, the year-over-year difference is even greater. The national average for regular is $3.83 cents a gallon, down from $3.87 a week ago and $3.918 a month ago. That’s 13 cents cheaper than last year’s average for this time.

In Palm Beach County, the most expensive market in Florida, regular gas averaged $3.904 a gallon, down from $3.968 a week ago and $4.023 a month ago. However, prices as low as $3.83 were seen in Boynton Beach.

What’s pushing prices southward? Decreased demand. The EIA says gasoline demand is down 4.2 percent from a year ago. AAA reports that demand is down in China and Europe as well.

"Since the start of the year, 2012 broke daily, weekly, and monthly records for the highest price averages at the pump, but now the tables have turned and prices are below last year's level," the AAA’s Jessica Brady said. “While there's always the possibility prices will climb back up, in the short term, gas prices are expected to decrease further as we enter May. If gas prices do continue to fall throughout the month of May, we could definitely see an increase in the number of Americans traveling for the Memorial Day holiday weekend."

On Monday, Crude oil fell 6 cents to settle at $104.87 a barrel on the New York Mercantile Exchange, while gasoline futures for May delivery fell 2.18 cents to $3.1844 a gallon.