Officials: sluggish economy driving down gas prices

Photo by Heather Middleton

Photo by Heather Middleton

By Johnny Jackson


Guided by declining crude oil prices, costs at the pump have slowly started to dip downward again, after a week of relatively unchanged prices throughout Georgia, according to AAA officials.

Metro Atlantans paid an average $3.61 per gallon for regular unleaded gas all last week, according to AAA's Daily Fuel Gauge Report. The statewide average also remained around $3.58 per gallon, while the national average held between $3.65 and $3.70 per gallon.

Monday's report revealed that metro Atlantans paid an average $3.58 per gallon for regular unleaded gas, down from $3.59 per gallon Sunday.

"We've had about four consecutive weeks now where oil prices have remained right at $100 per barrel," said Jessica Brady, spokeswoman for AAA Auto Club South. "Gas prices have hit that level -- that price range where they should be [relative to crude oil prices]."

Brady said conflicting factors have contributed to the stagnation of pump prices, including recent reports on jobs and the economy and news that Saudi Arabia would increase its production quotas next month by 10 million barrels a day.

May marked the 46th consecutive month Georgia has exceeded the national unemployment rate, which is currently 9.1 percent, up from 9.0 percent in April, according to State Labor Commissioner Mark Butler.

Butler announced on June 16, that Georgia's seasonally adjusted unemployment rate remained unchanged at 9.8 percent from April, to May. The state's jobless rate was 10 percent in May a year ago.

Saudi Arabia's decision to increase oil production was partly based on concern the high oil and gas prices are slowing the worldwide economic recovery, said Brady, who noted the increase is said to ease supply concerns and help make up for the loss of Libyan oil exports.

"The fact that Saudi Arabia decided to increase output quotas is good news for consumers," said Brady, adding the increased supply has helped keep oil prices below $100 a barrel.

Oil prices fell below $95 a barrel last week as the U.S. and international economic outlook was less than optimistic, she said. Crude oil settled on June 17, at $93.01 a barrel on the New York Mercantile Exchange (NYMEX) -- $6.28 below the week prior.

Brady pointed to news that the International Monetary Fund cut the U.S. economic growth outlook to 2.5 percent this year, from the projected 2.7 percent based on a slow economic recovery and poor job market.

The AAA spokeswoman added that consumer sentiment in the U.S. fell, while the country's stockpiles of crude oil rose to their highest level in almost 30 years for the month of May, totaling some 367 million barrels. She said the European debt crisis also continues to drive oil prices down amid concern the global economic recovery and fuel demand will remain slower-paced and lower than expected.

Bloomberg.com's Stock Market & Financial Markets Overview indicated crude oil trading held around $93.25 per barrel Monday on NYMEX.

Brady said retail gas prices have reflected minimal decreases for the past two weeks as oil prices hovered around $100 a barrel, and she expects gas prices will continue to follow oil price trends this week.

"Now that oil prices dropped below $95, consumers can expect gas prices to fall another 5, to 10 cents this week," she said. "If prices continue to drop as expected, we could see a much healthier travel outlook for Independence Day than we did during Memorial Day weekend."