Why gas prices are still falling

Even after Superstorm Sandy, they're at their lowest levels since March.

By Kim Peterson Nov 2, 2012 3:28PM
It's hard to believe gas prices are falling, with reports of long lines at Northeast filling stations, price gouging and even fistfights among frustrated drivers.

But prices at the pump continue to drop nationwide. And the bottom line continues to be this: People in Superstorm Sandy's path are using significantly less gas. Either they aren't driving much or they simply can't find gas because so many filling stations are without power.

That sudden slowdown is helping gas prices fall across the country.
Friday, the national average for a gallon of gas dropped below $3.50 for the first time since March, CNBC reported. Gas has fallen by 8 cents in the last week and 28 cents in the last month. You can see the national average at AAA's fuel gauge report.

Another reason gas prices are falling is because oil prices are dropping as well. Oil has drifted lower in Canada, North Dakota and parts of Texas, CNBC reported, and the price of oil is seen as an indicator of future gasoline prices.

But not everyone is seeing cheaper gas. There were numerous reports of fuel gouging in New Jersey, despite the state's anti-gouging laws. In fact, some stations had raised prices by as much as 30% in one day, a spokesman for the state's consumer affairs department told NBC News. The law only allows a maximum 10% markup.Image: Buying gas ( moodboard/Corbis/Corbis)

AAA estimated that 60% of New Jersey gas stations and 70% of those on Long Island has closed after Sandy's devastation, CBS News reported. For many stations, it was the lack of electricity that presented the biggest problem, not a lack of gasoline.

Only two of the region's refineries were shut down this week, the Associated Press reported. The Phillips 66 (PSX) plant in Linden, N.J. briefly lost power and was flooded in parts, and a Hess (HES) refinery in Port Reading, N.J. was also down. Another company, NuStar (NS), said some of its terminals were damaged by water, CNN reported. Shares of Phillips 66 were down 2.2% Friday, while Hess shares were up less than 1% and NuStar fell 1.2%.

More important is whether New York Harbor has enough power going to its giant oil storage tanks and pipelines so that it can accept fuel deliveries and distribute gas to the region.

The main roadblock to providing gasoline in the Northeast is power. Once gas stations and the fuel operations in New York Harbor see electricity return, then the Northeast can resume its normal fuel consumption.

But for now, the rest of the country can benefit from more supplies and a decline in the price of gas -- a decline that AAA estimates should continue through Thanksgiving.

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Tags: HES
281Comments
Nov 2, 2012 4:51PM
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What does President Obam's preacher have to do with the price of gasoline?  

Nov 2, 2012 4:48PM
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I`m sure it has something to do with the electon. If you look back a few years when Bush was in office just before the election it was under $2.00. Gas is a big issue, You are not going to get re elected making people pay $4.00 a gallon. That is very un popular.

Nov 2, 2012 4:29PM
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Gas prices have been artificialy high for the last 6 months and still are, disconnected even from the wall st barrel price which should place gas around $3.00 at the pump when most are $3.60-$4 range. Couple this the approaching election and months(not one week are you kidding me?) of repairs and rebuilding on the east coast you can expect prices should drop quite a bit more... 

 

Nov 2, 2012 4:12PM
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Not dropping here in metro Detroit. In fact, prices are UP since last week. Nice try, MSN.....

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