OTTUMWA — Gas prices are giving consumers some welcome relief, according to a new report from the U.S. Energy Information Administration, and more could be on the way.
Prices have fallen an average of five cents nationally over the past week, and they're down almost 36 cents compared to a year ago. Prices in the Midwest have run slightly higher than the national average for much of the summer, but the current regional average is below the current U.S. figure.
Iowa is doing even better. The statewide average on gasbuddy.com, a site that monitors gas prices using public input, put Iowa's average price at $3.41 per gallon. That's five cents below the national average.
Prices for Ottumwa Wednesday stood at $3.19 per gallon, with similar prices reported for most area communities.
What's happening? Why are prices falling now after being so high for so long?
Patrick DeHaan, a senior petroleum analyst for gasbuddy.com, says basic economics explains much of the shift.
“By and large, there are two main reasons for gas prices to decline in the fall. One is supply and demand,” he said.
Gasoline supplies are high right now, and people are driving less with the arrival of school and the fall season's tendency to curtail outdoor activities. That helps.
There's another seasonal factor at work as well. The Environmental Protection Agency requires cleaner burning gasoline during the summer months. Getting gas to burn more cleanly costs more, so the base price is higher. That requirement runs during the summer months (June 1 to Sept. 15).
The calendar alone doesn't explain the rapid fall, though. DeHaan said the worry over U.S. involvement in Syria has eased and there have been signals of a “possible breakthrough with Iran.” In the latter case, easing of relations could bring relaxation of sanctions and open the way for more Iranian crude to make it to the markets.
There's even better news ahead. There are reasons to believe the price will keep falling, at least through the end of the year. DeHaan said prices typically hit their lowest point between Thanksgiving and Christmas with the past several years bottoming out within a week or two of the latter holiday.
If this is a typical year, prices could fall another 20-30 cents. That would put Iowa's average near $3 per gallon. Some areas could see the price dip below $3, a level that hasn't been present in years.
So, a fall below the $3 per gallon threshold is possible. Is it likely? DeHaan had good news there, too.
“I certainly think there's reason for optimism,” he said.