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05 11, 2012 by Shreveport Times
A slide in the price of crude oil has government officials retooling predictions on this summer's gas pumping pains.
This week, the U.S. Energy Information Administration reduced its forecast for average gas prices to $3.79 per gallon for the summer travel season, down from an initial estimate of $3.95. Prices for U.S. crude oil have declined more than $8 per barrel since early April.
That's good news for drivers like Bobby Stutts, who said high prices can deeply cut his budget, especially considering how often he travels to Dallas or Savannah, Ga., to visit family.
"I don't make the kind of money to afford that much gas, and it hits my budget big-time. I hate the gas prices here," said Stutts, who lives on disability payments. "It's going to make it hard to have spending money on my trips if prices continue to be this high."
In a normal week, Stutts fills up his car once or twice a week for about $50.
Last year, drivers paid $3.71 per gallon on average for gasoline from April to September, the peak travel season. Analysts earlier this year feared drivers could be paying as much as $5 per gallon this summer, well beyond the record $4.11 per gallon record of 2008.
Gasoline prices rose 20 percent from January to early April, reaching an average high of $3.94 on April 5. According to AAA, the national average cost for a gallon of gasoline is now $3.74 — 20 percent cheaper than one year ago.
The average price per gallon in Louisiana, and Shreveport specifically, is $3.58, according to AAA.
Crude oil prices have declined about 12 percent since peaking near $110 per barrel in February.
The price of crude oil comprises about 67 percent of the cost of any gallon of gasoline, according to the American Petroleum Institute. Refining, 16 percent, excise taxation, 11 percent, and transportation and retail, 6 percent, cover the rest.
Fears peaked last month as tensions in the Middle East neared a boiling point, especially concerning Iran and Syria. Since, Iran has re-engaged in talks about its contentious nuclear program and the Syrian government has allowed United Nations and Arab League observers access to the country in hopes of leveling conditions of popular revolt more than a year old.
"These things can escalate quickly, sparking fear and boosting oil prices," said Gregg Laskoski, senior petroleum analyst for GasBuddy. "We're not out of the woods yet, but things have settled some."
New government expectations for gas prices are at least partially linked to a weak national employment report released last week, Laskoski said. If people aren't hiring, there aren't new commuters on the road, and analysts don't see demand rising much beyond already low levels.
MasterCard SpendingPulse said Tuesday that average gasoline demand fell 6.1 percent last week in the United States. Its analysis of credit card purchases shows American drivers have purchased less gasoline every week for more than a year.
Lower gas prices are an overall positive sign for the U.S. economy, Laskoski said, because it puts more discretionary spending money in the pockets of Americans. Despite falling prices, however, people will remain mindful of fuel costs.
Benny Mitchell, owner of the local B&D Lawn Services, said he can spend as much as $40 for his truck and $60 for his lawn care equipment per day in gasoline. He said lower prices are going to help his bottom line.
"It cuts into our profits," Mitchell said. "Last summer was hard. We've got to have gas for the job no matter what."
The Associated Press contributed to this article.
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