NEW YORK (Reuters) - U.S. drivers could enjoy a drop of up to 50 cents per gallon in gasoline prices by this spring as high fuel prices and the threat of a recession force them to conserve, experts said on Wednesday.
U.S. gasoline supplies hit a near-14-year high of 227.5 million barrels last week, helped by falling demand for the fuel, the U.S. Energy Information Administration said on Wednesday.
“Gasoline stocks are continuing to increase and it implies that people are probably cutting down on gasoline consumption — a result of the weakening economy,” said Phil Flynn, an analyst at Alaron Trading in Chicago.
U.S. gasoline demand over the last four weeks only averaged about 1 percent more than the same period last year, the EIA said. Demand growth for the fuel has typically averaged about 1.5 to 2 percent a year and has been one of the major drivers of global oil markets.
“Something dramatic is occurring with consumer driving habits,” Geoff Sundstrom, a spokesman for AAA motor club, said in a telephone interview. “These numbers, if sustained over next couple of weeks, should set the stage for a reversal of price forecasts.”
He said U.S. gasoline prices in the spring could fall 50 cents a gallon from Wednesday’s $2.98.
Spring gasoline prices in the world’s largest energy consumer set the stage for fuel prices during the summer months when vacationers drive fuel demand to annual peaks.
In December, when oil prices were trading closer to a record $100 a barrel, compared with Wednesday’s level of $87 a barrel, AAA predicted spring gasoline prices could hit a new record high above $3.50 per gallon, with fuel in some regions of the country hitting above $4.00.
The EIA had forecast similar spring gasoline prices.
On Wednesday, EIA analyst Doug MacIntyre warned that unexpected maintenance or economic run cuts at oil refineries could spike gasoline prices at any time, especially since U.S. refineries last week were only running at 84.3 percent of capacity.
Even so, he said he “certainly” expects that his agency next month will publish lower spring gasoline price forecasts.
Sundstrom said drivers are buying less gasoline because they feel the pinch from high fuel prices that have clung to near $3.00 a gallon and fear a recession amid the housing downturn.
“High gasoline prices by themselves have never altered consumer driving habits,” he said. “Only when combined with some other factor have they fallen. In this case, it’s anxiety about a recession.”
He said gasoline demand may have fallen because businesses are making fewer sales calls and short haul deliveries, while consumers may have curtailed some shopping trips.
The record average price for gasoline, nearly $3.23 a gallon, was hit on May 24 last year, according to AAA.
Editing by Jim Marshall