Gas Prices Continue to Drop for Winter, Diesel Stagnates

The national retail gasoline average is down to $3.38 per gallon, its lowest level since July 6 and some 50 cents per gallon lower than where it stood just 90 days ago, according to the latest fuel report from WEX Inc.

Prices are still more than 10 cents per gallon higher than last year, but according to WEX, most experts say prices should continue to slide at a fairly steady pace for the remainder of the year, which could put them below year-ago averages by New Years Eve.

Most experts also say that several states will see an average price below $3.00 by Dec. 31, especially in the Southwest where spot wholesale prices have been priced well below New York harbor wholesale prices. Texas and Wyoming already have about 10% of their sites priced under the $3.00 threshold and several others are seeing more and more of their stations heading below that mark daily.

WEX said that demand has been dismal the past few weeks, at less than 8.4 million barrels per day. Two years ago demand was at more than 9.1 million barrels per day, which is a significant drop of nearly 8%. Market watchers believe that much of the demand destruction is the result of Superstorm Sandy coupled with more online holiday shopping.

Diesel on the other hand has stagnated and is still above $4.00 per gallon, according to WEX. Thanks to strong global demand, WEX said that diesel will likely trickle down just slightly over the next few weeks, but supplies are tenuous. As well, a long cold spell could push diesel prices up rather quickly.

To see last month's report from WEX Inc., click here.