WASHINGTON – Since August 1990, the U.S. Energy Information Administration (EIA) has been releasing its weekly survey of U.S. gasoline prices. In just six weeks, the average retail gasoline price per gallon has fallen by 54 cents, including this past week’s 12-cent decline. “This is already the second-largest uninterrupted decline in the history of the survey,” reports the EIA in yesterday’s This Week in Petroleum, noting that the largest decline in survey history was the 9-week, 78-cent drop in gasoline prices in 2005 after Hurricane Rita.

“Some analysts have predicted that average U.S. prices will drop near $2 per gallon or lower, and prices under $2 have already been reported in a few locations. Not surprisingly, one of the most frequent questions posed to EIA staff recently has been ‘How low will gasoline prices go?’”

According to EIA, crude oil prices “are fundamentally driven by the global balance between supply and demand, often influenced by geopolitical or natural events.” But simultaneously, the price of gasoline relative to crude oil “is a major factor in the profitability of refining, and the size of that spread helps to determine whether refiners will demand more or less crude oil, influencing its price.”

EIA notes that reductions “already seen in spot and futures markets could imply a further decrease in the U.S. average retail price of as much as 25 cents (to around $2.25 per gallon), if those wholesale markets don't turn upward in the interim.” For prices to go significantly lower, crude oil prices would also have to drop, which are currently around $62 a barrel, or the “spread between crude oil and gasoline prices” would have to drop, which is now averaging about 7 cents per gallon.

Meanwhile, EIA reports that the U.S. average retail price for regular gasoline fell 12.1 cents last week to hit $2.497 cents per gallon as of September 18, which is 28.9 cents lower than a year ago. Prices fell for the sixth consecutive week, reaching the lowest national average price since March 13, 2006.

Retail diesel fuel prices also fell by 14.4 cents to reach $2.713 per gallon as of September 18, which is 1.9 cents lower than this time last year and represents the fifth consecutive week prices have fallen.