Gasoline prices have slowly fallen during the weekend to an average $2.59 this morning and will continue to fall. Some areas of the country saw a price hike last week (the "Speedway States") while others did not. The areas that saw prices rise significantly (20-plus cents per gallon) will see prices fall more quickly than others.

This week U.S. consumers can continue to expect falling prices and the West Coast will again remain the high price champion in the lower 48 states. By the end of this week, the U.S. average will drop three to eight cents to near $2.54, although some areas may be slower to pass their lower cost onto consumers.

Wholesale prices, the lead indicator for where retail prices are heading, dropped significantly the last few days and was again trading lower as international electronic trading opened last night. At last check, wholesale gasoline futures were down to $1.75, much lower than the $2.11 hit just weeks ago.

Much of the reasoning for lower prices can be traced back to renewed concern about the U.S. economy. The demand outlook is expected to be lower than forecasts made just months ago, signs that consumers aren't increasing their use of gasoline. The ever important Department of Energy report will be released Wednesday with expectations of a small loss in oil inventories with a gain in gasoline inventories.

Patrick DeHaan
Senior Petroleum Analyst
GasBuddy