Why are gas prices so low in NJ … and can it last?
Gasoline in New Jersey has been getting a little bit cheaper lately. But an oil industry expert says prices will eventually turn around and start heading upward.
Gas prices are continuing their three-week downward trend. In the past week, the price of regular unleaded has dropped three more cents to right under $2.30 per gallon, nationwide, according to the U.S. Energy Department. Here in New Jersey, the average on Monday was $2.36, down from $2.40 a week ago.
Tom Kloza of The Oil Price Information Service said weak demand in January prompted retailers to lower prices. How low?
"Some locations in New Jersey that are seeing gasoline at about $2.07 to $2.10," Kloza said.
He said the price of a barrel of crude has "subtle drop," but "we really have not seen crude oil do anything since Dec. 12. It has remained between $52 and $55. So that is not moving."
Kloza said for gasoline, the low demand, the result of less driving, has created a gasoline inventory equivalent to a 30-day supply, something we haven't seen since 1995. He said demand on a nationwide basis is down 7.7 percent year to date.
"We will see a rally. But in the meantime, we are on a collision course with the bottom of the market," he said.
Kloza contributed some of the weaker demand to the bad weather in the northeast, and the fact that there is just less to do in the dead of winter. Also, he said that while we are all sitting at home, we are also waiting for the mail to deliver all of those credit card bills from the holidays.
Translation: Lss money for other things.
As spring gets closer, refineries will switch to the summer formula, people will drive more — and gas prices will start to climb, Kloza said.
"It is definitely a seasonal thing, and it is why the market goes up every spring — pretty much like 'hope spring eternal' for some spring-training baseball teams," Kloza said.
Joe Cutter is the afternoon news anchor at New Jersey 101.5.
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