Gas Prices Reach Five-Year Low to Close Out 2008

“Drivers will end 2008 with the lowest gas prices in nearly five years. The national average for regular unleaded drops four cents this week to $1.62, while Oregon′s average increases half a cent to $1.74. The national average hasn′t been this low since January 2004, while Oregon′s average is at its lowest point since February 2004." AAA Oregon Public Affairs Director Marie Dodds says, "AAA remains reasonably confident that retail gas prices will continue to move somewhat lower in the coming weeks because the troubled global economy has significantly reduced demand. January and February are traditionally the slowest period of the year for fuel consumption, and we could see a national average perhaps as low as $1.50 a gallon between now and the end of February."

A few developments may push crude oil and gas prices slightly higher in the short term: the pledge from OPEC to cut production by more than two million barrels a day starting in January, and the resumption of dollar weakness against other currencies following the Federal Reserve′s decision earlier this month to lower the discount rate. Crude oil is bought and sold in dollars, and a weak dollar pushes up the price of oil and other commodities to U.S. consumers.

Crude oil today is trading around $39 per barrel, after rising to more than $40 per barrel during Monday′s session amid concerns over that Israeli air strikes in Gaza could lead to a conflict with the potential of disrupting production. But rising crude oil inventories and weak demand pushed prices lower again today. Also, this week between Christmas and New Year′s Day is traditionally a time of light trading which can lead to price swings. Crude oil prices will show a loss of about 60% for the year, the largest decline since futures began trading 25 years ago. Crude started 2008 at about $100 per barrel, then hit a record high of $147 per barrel on July 11. It has fallen more than $100 since then.

Only two states still have averages for regular unleaded at or above $2 a gallon, same as last week. The most expensive gas in the country for the 27th week in a row is Alaska at $2.56, followed by Hawaii at $2.33, New York at $1.84, California at $1.84 and Washington at $1.80, with its average increasing two cents this week. Washington was sixth most expensive last week. Oregon′s gas prices are ninth highest, up from 12th last week. Missouri replaces Wyoming as the state with the least expensive gas with regular unleaded at $1.41 a gallon.

Diesel prices show declines for the week. The national average drops six cents to $2.43, while Oregon’s average falls five cents to $2.46 Hawaii has the highest statewide average price for diesel again this week at $3.94, followed by Alaska at $3.56, District of Columbia at $2.88, New York at $2.88, and Connecticut at $2.79. Oregon′s average diesel price is 22nd most expensive this week, up from 26th last week. Washington′s diesel price remains at $2.51 which is 14th highest, up from 23rd last week. A year ago, the national average for diesel was $3.42 and Oregon′s average was $3.41.

Get the latest fuel prices at AAA′s Daily Fuel Gauge at www.fuelgaugereport.com. To check fuel prices across Oregon and the nation, go to the AAA Fuel Price Finder at www.AAA.com.