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Gas Prices Down Prior to July 4 Holiday

In a remarkable departure from the precedent set by significant increases shortly before Labor Day, gas prices around the nation are dropping in the run up to Independence Day. It appears the reason for price trends relates directly to the elimination of the factors that pushed it higher one short month ago – as opposed to a simple supply/demand calculation. According to Fox Business:

“AAA spokesman Michael Green said Monday the national average has been on the decline for nearly three weeks running. Gas prices had previously been on the rise as a result of regional supply disruptions in May and early June, first in the Northwest and then the Midwest.

Despite the recent reprieve, prices traditionally rise as summer demand heats up. The national average climbed 17 cents a gallon in July 2011 and 16 cents in July 2012, Green noted.”

This difference is particularly apparent in Michigan, which was among the Midwest states hardest hit by the sharp increase in prices in late May. The Mining Gazette reports:

Michigan gasoline prices have dropped 80 cents per gallon in less than a month, just in time for the Fourth of July travel season.

According to AAA’s daily fuel gauge report, today’s state-average price of $3.43 per gallon is the lowest in a steady stream of price declines from $4.23 on June 6.

“The last couple months there have been major issues at two of the bigger refineries,” said Nancy Cain, spokesperson for AAA Michigan. “They’ve been back online, and we started seeing prices dropping. There’s no issues right now at any of the refineries.”

If nothing else, the current decrease in prices illustrates clearly just how significant price shocks are in determining the prices at the pump for millions of Americans. Consumers and small business owners alike would be wise to keep this lesson in mind in the future.

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