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Could decline in South Sound gas prices be a harbinger of lower gas prices in 2013

Post by John Gillie / The News Tribune on Jan. 10, 2013 at 2:56 pm |
January 10, 2013 2:56 pm

Average gas prices in the South Sound this week are more than six cents a gallon less than they were at this time last year.

According to The News Tribune’s Gas Deal Finder, the average price of a gallon of unleaded regular Thursday in the Tacoma area was $3.404 a gallon. That price is 6.3 cents less than at the same time in 2012. Thursday’s price is also 1.8 cents less per gallon than a week ago.

Is that mildly positive news a sign that gas prices will trend lower here in 2013 than they did last year?

While a single week’s prices hardly constitute a solid trend, national energy experts are predicting fuel prices will decline on average from last year’s.

Forecasters say ample oil supplies and weak U.S. demand will keep a lid on prices. The lows will be lower and the highs won’t be so high compared with a year ago. The average price of a gallon of gasoline will fall 5 percent to $3.44, according to the Energy Department.

“Everything is lining up to lead to softer prices this year,” Tom Kloza, chief oil analyst at the Oil Price Information Service, told the Associated Press.

That would still be the third-highest average price ever. But a discount of 19 cents per gallon from 2012 would save the typical household $205 this year and free up $25 billion that could go instead to restaurants, malls or movie theaters — the kind of consumer spending that accounts for 70 percent of American economic activity, the AP reported.

“It’s a little benefit to the economy, and it’s a little more reason the Fed doesn’t have to worry about inflation,” said James Hamilton, an economist at the University of California at San Diego who studies energy prices.

As West Coast residents painfully discovered last year, unpredictable events can throw carefully made predictions in the trash can as prices escalate because of events such as refinery fires and shutdowns, MidEast instability and Wall Street speculation.

A fire at Washington’s largest refinery, BP’s at Cherry Point, last winter helped propel local gas prices over $4 a gallon. Those prices peaked in April, fell for two or three weeks and then headed upward again until Memorial Day when they hit levels well over $4 a gallon.

Another local price peak occurred in late September and October, months during which prices are usually falling. A refinery shutdown in California and pipeline problems were blamed for that unseasonable price increase.

Gas prices locally are being dampened by an ongoing gas war in Bonney Lake where three stations are selling gas for $3.25 a gallon on less, the lowest in Pierce County. In the Olympia area, one station, an Arco at Martin Way East and Ranger Drive Southeast, gas was priced at $3.22 a gallon.

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