Gas Prices Continue to Drop in New Jersey
Gas prices are down another two cents in New Jersey, averaging $2.77 a gallon this week. That's four cents cheaper than a month ago ($2.81) and 13 cents cheaper than a year ago ($2.90).
Robert Sinclair Jr., a spokesman for AAA Northeast, said the lower gas prices in the state bodes well in the midst of the summer driving season. There are still many people taking late summer road trips.
So why the drop in prices? Sinclair said people are still driving a lot. The Federal Highway Administration said every year for the past five years, people are exceeding the record from the year before. Roughly 3.7 trillion miles are being driven collectively. But demand for gasoline is down. The Energy Information Information reported the week ending July 26, drivers burned roughly 401 million gallons of gasoline per day. Sinclair said that's a lot of gasoline, but when you compare that to last year, it was 406 million gallons of gasoline daily. So lower demand means lower price.
Sinclair said people drive more and burn less fuel because vehicles are more fuel-efficient. Every year, between 15 and 16 million new vehicles are sold and as they saturate the fleet, the average MPG gets better and less gasoline is burned.
Heading into September and the end of summer driving season, Sinclair believes lower gas prices will continue. He said summer gasoline is much more expensive to refine and distribute so when stations switch over to the winter blend come fall, the price drops.
As the trade war heats up across the nation, with that comes higher prices and lower economic activity. People are not going to buy as much, said Sinclair. There is not going to be much manufacturing, there's less demand for petroleum products. That means the price goes down. This also affects the crude oil market.
Sinclair said crude oil is lower. Just two weeks ago, crude oil was at $60 a barrel. Currently it's $55 a barrel.
While Sinclair believes the downward trend in gas prices will continue into the fall, anything can happen. Most prominent among those is hurricanes. He said if a storm hits the Gulf Coast —the bread basket of refinery and production of gas and oil on the East Coast — that would throw everything out of whack and gas prices would soar again.
AAA Northeast said Louisiana currently has cheapest gas in that nation at an average of $2.33 a gallon. California has the most expensive at $3.67 a gallon.