Gas is 24 cents/gallon cheaper than Memorial Day
Gasoline prices usually peak in the summer. This year, however, they peaked a little earlier, on May 5. The subsequent slide has made gas about 24 cents per gallon cheaper than it was on Memorial Day.
The national average now stands at $3.55 per gallon. That's the cheapest gasoline has been since late March. Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, expects the national average to drop another 25 to 30 cents per gallon this year.
"Prices will be lower until we get to hurricane season, then who knows?" Kloza said.
Hurricanes that pass through the Gulf of Mexico can potentially disrupt oil production and force fuel prices higher.
While gas is cheaper than it was on Memorial Day, it's hardly inexpensive. It's still 79 cents more than a year ago. And the only other year gas prices were higher for the July Fourth holiday was 2008, when gas was around $4.10 per gallon.
The drop in gas is due to a decline in oil prices. Benchmark West Texas Intermediate has given up more than 16 percent since the beginning of May. The contract for August delivery lost 48 cents to settle at $94.94 per barrel Friday on the New York Mercantile Exchange.
In London, Brent crude fell 71 cents to settle at $111.77 per barrel on the ICE Futures Exchange.
Oil fell Friday after China reported that its manufacturing industry cooled off in June, slipping to its slowest pace in 28 months. Activity slowed down as credit tightened due to inflation-fighting measures and weaker oversea demand. The country is still expected to drive world oil demand for years, but a slowdown in manufacturing could temper the demand for fuels.
In the U.S., however, factory activity picked up in June, in part because of lower fuel prices. The Institute for Supply Management, a trade group of purchasing executives, said Friday that its index of manufacturing activity has increased for 23 straight months.
In other Nymex trading for August contracts, heating oil dropped 2.18 cents to settle at $2.9245 per gallon and gasoline futures added less than a penny to settle at $2.9726 per gallon. Natural gas fell 6.3 cents to settle at $4.33 per 1,000 cubic feet.