Gasoline finally starts to drop
Pump prices have fallen steadily over the past month as oil prices and demand have come down.
The average nationwide price for a gallon of regular gasoline is $3.72, down a penny from Thursday, 7 cents from a week ago and 24 cents from a month ago.
And it looks like that trend may continue for a while, the way oil prices are going. Friday saw a sharp drop in light sweet crude for July delivery to less than $100 a barrel. The price drop came after reports that Saudi Arabia would boost production to 10 million barrels a day in July.
On top of that, the demand for gas -- at least in the U.S. -- is down. In the four-week period ended June 3, gasoline use was 1.3% lower than it was in the same period last year, according to MasterCard. We've seen the same pattern for months now.
Part of the reason is that people are driving less or switching to more-fuel-efficient vehicles. Ford (F), General Motors (GM) and other carmakers report strong interest in hybrids and compact cars as shoppers look to trade in their gas guzzlers.
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People are also carpooling and making fewer trips, which has hurt Wal-Mart (WMT) and McDonald's (MCD).
There's one more reason behind falling gas prices: the unrest in the Middle East. Or, to be more precise, the lack of more dramatic unrest in the Middle East. Oil production in Libya ground to a halt in the uprising there, triggering worries of similar conflict in Saudi Arabia, the largest oil producer.
But Saudi Arabia has been surprisingly stable, and its reported move to boost production in July only reinforces that.
So it looks like gas prices may continue heading south and stay there for a while. The chief executive of Gulf Oil told MSNBC that prices could drop to $3.50 or lower by July 4.
That would be a welcome boost to the slumping economy. One recent poll of small-business owners found that higher gas prices caused 41% to raise their prices, while 26% laid off workers or cut hours.
Large companies are affected as well. Airlines have raised fares in response to higher fuel prices. Food producers like Kraft (KFT) and JM Smucker (SJM) are paying more to transport goods.
Higher gas prices have been one of the biggest drags, if not the biggest, on the economy. If this reversal holds, the impact could be remarkable.
let me get this straight...gas prices are going down because: less consumption, more people switching to alternative fuel vehicles and the unrest in the Middle East........
Aren't these the same reasons they gave on why the price went up??
(personally, anything over 75 cents a gallon is robbery..no matter what their excuses are)
"But Saudi Arabia has been surprisingly stable, and its reported move to boost production in July only reinforces that."
Yet we are paying laborers millions of dollars in North Dakota which they claim has more oil than Saudi, why the hell are we still depending on foreign oil? I just don't get it.
I agree with skier99.....Gas prices will jump .10-.15 cents per gallon overnight but then take 3-4 weeks to trickle down a penny or two. So sick of this government b.s!
Obama defied a court order to block drilling.
He is on the record as saying "Higher fuel prices are good for America" when he was speaking to an Environmental special interest group.
Granted, he has no business experience, and so he wouldn't have any idea how important affordable energy is to our economy - but really is there a better way to attack capitalism than to diminish the availability of energy that runs it?
We need leadership that gets how business works.
a saudi prince last week was reported to have claimed the drop is because they fear americans will replace their need for oil with new technology. so much for "supply and demand" they teach in economic classes. can't wait for the day we all have hybrid vehicles that eliminate our reliance on the middle east. a trillion in profits in 2010 while they watch the world suffer and laugh. arrogant bastards. i agree with $0.75 gallon price, which we'll never see until the day comes we've no use for the saudi's. also agree with the abundance of speculators who control our markets with fear.
Amazing. And we think speculators have nothing to do with this??? The market generates fear of shortages. That implies a greater demand for short supply. Immediately the price goes up...What has happened, is the price reached a level that the market could not bear, As a result, demand dropped and prices dropped with it. Consumers NOT big oil or OPEC drive the market. IF we were ever able to achieve even partial independence from petro products,
the result would be startling...There is no shortage of oil. There is also no shortage of greedy speculators and oil producing countries whose economies hinge on black gold. If they can get us to believe the tap will run dry, they can write their own check...
I am completely agree with Heinzwurst, demand - it just excuse for speculators move up price. Libya produced only 2% of oil, but the prices moved up 25%! Summer hits comes - demand is increased let jack up natural gas prices, even though we have a plenty of gas! Financial institutions have 85% of oil future contracts! We are getting rip off right here! Silence will kill us!
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