Mideast violence. Tensions with Russia. Job growth in America. These are the ingredients for higher energy prices.
Except this summer. Instead of a long, hot summer at the pump, this has been the summer of cooling energy prices.
In the next week, crude oil threatens to fall to its lowest price since early February. Pump prices have fallen 6 percent since the beginning of the summertime driving season, according to AAA’s Fuel Gauge Survey. As Labor Day approaches, signaling the unofficial end of higher summer fuel demand, the national average price of gasoline could drop to its lowest level of the year.
It has been estimated that every penny change in gasoline prices equals $1 billion in spending on energy by Americans. Using that rule of thumb, drivers have saved $22 billion at the pump this summer as prices have steadily fallen. In the absence of a pickup in wage growth, paying less at the pump amounts to a boost for household budgets.
The rush of American petroleum has helped fuel the drop in prices. The United States produces more oil now than it has since 1986. Foreign oil imports have dropped to mid-1990s levels. And oil refineries are running at near-record levels to turn that American petroleum into gasoline and other fuels. The Energy Information Agency expects American oil production next year to hit the highest annual average level since 1972.
The cooling prices at the pump may continue well beyond summer.