Today’s fuel price musings - at this rate we’ll be under $3 in … well, probably never

October 2nd, 2008 at 06:41pm Thomas V. Bona

Prices continue to fall in Illinois, as supplies come online after hurricanes Gustav and Ike and oil prices tumble on bad financial news.

Parts of the Midwest and Southeast were hit hardest by the supply drops during hurricane season, and we’ve had inflated prices for a bit now. But the discrepancy is coming down steadily.

Some perspective:

The last time the national average was this low (just under $3.60 a gallon) was in late April. The Illinois average then ($3.71) was six cents lower than it is now. The Rockford average ($3.65) was seven cents below where it is now. So we’re getting close to being back to a normal gap between national and local gas prices. Again, that’s because it’s taken time for refineries and pipelines to turn back on after the hurricanes passed.

Meanwhile, oil fell to $94, back almost to where it was pre-hurricanes. In fact, we’re finally at the point where gasoline has risen about as much in the past year as oil. Oil is up 24 percent from this time last year, while gas is up around 29 percent. Those two numbers would be closer if the “hurricane premium” of six or seven cents locally wasn’t in play.

Earlier this week, I quoted two Illinois energy trading analysts saying where they see gas going. Both said it should go down to at least $3.25 a gallon by year’s end, but one said it could hit $3 or less. I personally don’t know if we’ll see *that* much of a drop, but $3.25 seems likely if nothing big changes.

Here are the prices (as always, courtesy of AAA’s fuelgaugereport.com):

Gasoline: Rockford dropped three cents to $3.72 a gallon. We have the third-highest gas prices in the state. The Illinois average dropped three cent2 to $3.77. The national average dropped two cents to $3.60. Illinois has the fifth-highest gas prices in the nation.

Diesel: Rockford dropped just over a cent to $4.06 a gallon. We have the fifth-highest diesel prices in the state. The state average dropped a cent to $4.19. The national average dropped a cent to $4.08. Illinois the ninth-highest prices in the country.

Entry Filed under: Fuel price musings