Will gas prices fall even more?

The release of 60 million barrels from reserves is pushing crude oil prices down. Will that mean less pain at the pump?

By Kim Peterson Jun 23, 2011 1:03PM
The U.S. led the push Thursday to release 60 million barrels of crude reserves from stockpiles, replacing some of the losses that resulted when Libya went offline.

The move had an immediate impact on oil prices, as benchmark crude in the U.S. dropped $5 a barrel to $90. And in the futures markets, gasoline fell 14 cents a gallon.

So does that translate into cheaper gas? Unfortunately, that's a little iffy.

Gas prices have already been tumbling, and no one's sure how much more they can drop. Today's nationwide average for a gallon of regular is $3.61, according to the AAA Fuel Gauge Report. That's down from $3.69 a week ago and $3.83 a month ago.

One analyst discusses the news and what that means for oil prices and Libya in the following video.

Post continues below:
Gas prices had been pushed up by oil speculators who continued to place bets that the price of crude would rise. But unleashing 60 million barrels has struck at speculators' hearts. "The speculators will have to change their positions," an oil analyst told MSNBC.com. "Instead of betting on higher prices they have to bet on lower prices."

Lower oil prices should mean lower fuel prices -- which is exactly what the U.S. economy needs. Suddenly, money that was forced to go to gas budgets gets freed up. Consumers can spend more in other areas. Companies see transportation costs fall, giving them more money to hire.

But 60 million barrels isn't really that much. The entire world uses about 89 million barrels a day, The New York Times reports.

But the message to speculators is loud and clear. There are plenty of barrels of oil in reserve -- the U.S. alone has 727 million -- and betting on an uptick in oil prices is risky. The U.S. is providing about half of the 60 million barrels to be released from reserves, and the rest will come from other countries in the International Energy Agency.

At least for now, the speculators seem to be running for cover. The price of crude oil fell below its 200-day moving average of $92.58 a barrel -- the first time the price has fallen through that mark in nine months, the Times reports.

Politics is certainly at play here, of course. The Obama administration would love to see the economy improve before the next presidential election. But one source told the Times there were other factors at work as well, including the expected bump in demand from summer vacationers and frustration at OPEC, which failed to agree to increase oil production.


Tags: oilopec
93Comments
Jun 23, 2011 4:43PM
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I remember a time when gas was half the price it is now and yet the American economy was at its strongest. If oil and correspondingly gasoline goes down. Then discretionary spending in other sectors goes up. Its a No Brainer. I also point out if Americans are buying more things then jobs open up to manufacture/market/sell whatever the case.
Jun 23, 2011 4:54PM
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It's amazing how top officials can stand there and tell us that rising or high fuel prices have no impact on the economy. How absurd is that? At the end of last year into the beginning of this year, fuel prices were under $3 a gallon and you could actually see the economy start to improve and more importantly, consumer confidence was rising as well. Once the prices starting going back up due to the Libya conflict, it was like shutting the faucet off on our economy.

It's common sense...if a family has to spend $100 a week to commute to work and over the course of a year gas doubles, that's $400 a month that they don't have to go to dinner, go to the movies, buy their kids gifts, go on vacation, but a new tv, the list goes on and on. 

Get the price of gas down to a reasonable level and watch our economy soar!!
Jun 23, 2011 4:47PM
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Plain and simple-they need to ban speculation.
Jun 23, 2011 5:25PM
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Gas prices had been pushed up by oil speculators...  We do not need a "middle man" in this process...  Gasoline affects everyone's budget in getting to work into how much we all have to pay for trucks to deliver items, which drives up the prices for food, clothing, etc...  I think the government needs to cut out all of these kind of practices which greatly impact the gasoline prices...  Enough is enough already!!!  We need to get this country back on track before it REALLY is too late!  And that would DEFINITELY be a step in the RIGHT direction!
Jun 23, 2011 5:15PM
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Too little...Too late. Most people are already financially damaged beyond repair.
Jun 23, 2011 5:40PM
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This should not be iffy at all gas prices should never had gotten to where they were in the first place because of the simple fact of supply and demand. With the drop in oil prices gas should be on a huge downturn. When oil is 85 to 90 dollars a barrel gas should be about $2.25. We have been gouged for a long time with false price ceilings and market manipulation.
Jun 23, 2011 5:48PM
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We all know what a crock oil prices are. Even as they were skyrocketing last year and the pundits were all saying how this was driven by:
demand
unrest
shaky economy
you pick the next one...,
all of us "common folk" knew prices were being manipulated by speculators. This has been  been spectacularly proven as our economy has languished and gas prices are still high.
What bothers me almost as much is the adjectives used by the MEDIA to describe this fiasco.
see above-  Gas prices have already been tumbling, and no one's sure how much more they can drop... 
Tumbling- really? oil has dropped almost $20/barrel in the last few months and gas prices have fallen about $ .25-.30 a gallon. But when oil is skyrocketing- the MEDIA uses terms like "escalating" or "rising". Why can't they call it like it is?
Jun 23, 2011 5:46PM
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Kill oil prices and food prices, clothing, cost of homes, cars everything that is a petroleum based product will have a most positive impact on consumer prices thus sentiment.  The speculators at the CBOT pit, investors, big oil and people like Congressman Paul Ryan have made millions from aritificially inflated petrol pricing.  Now it is time for the little guy to get even.

 

By the way I just watched the manipulative commercial arguing for Social Security reform by Paul Ryan Multi-millionaire who can already retire with full government pension and benefits after his very short years in congress.  His commercial which lacks any detail makes the final statement that Social Security reform will mean that that average working person will be guaranteed a retirement just like Congress.  What they faill to mention is that they get full retirement after working 6 years, not 35 or 40 years like us and they do not mention that they get a 25% booster while we will probably be forced to take a 25% cut in our benefits.

 

Clinton used Social Security to balance the budget.  Bush used it to fund part of his acursed wars.  If the government left OUR money alone there would be no problem with Social Security, as I feel there already is not....more lies.  As it is there is enough money to fund benefit payments as they are currentl until about 2036.  I think the next time Congress creates a budgetary shortfall the money should come from their pension plan not our Social Security.

Jun 24, 2011 11:49AM
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speculators need long prison sentances for their part in ripping the American public off with these high prices, stop playing games and put them where they belong in jail!
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Not on your life ! If you think that prices will ever go down think again ! OPEC runs the world ! They hold all the cards and we suffer for it ! we have to put a stop to oil being traded as a commodity on the stock market !
Jun 23, 2011 5:52PM
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Put yourself in the oil companies shoes for just a minute...If you knew that the entire country wanted alternative energy sources whether it be alternative fuels, wind energy, solar energy, etc, wouldn't you try to maximize the most of your profits for the limited number of years that you had left until these other sources become full blown energy suppliers?  They know we will eventually convert over to these other sources so they have no interest whatsoever to lower prices to help consumers.  Oil companies are raping us every single day and the government is just sitting there lubing up the probe that is penetrating our....wallets.

Jun 24, 2011 10:07AM
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gas has not dropped 14 cents a gal. oil speculaters should be outlawed,in fact all speculation should be banned its just another form of gambling with grave consequences.
Jun 23, 2011 5:30PM
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Earlier today I was able to see figures on what oil and retail gas prices have done since the beginning of the year.  Light crude, what they make gasoline frome, is about the same as it began the year.  However the price of unleaded has gone up almost 18% in that time frame.  What's wrong with this picture?  Who's to blame, the speculators, the people who won't let us drill in the US, or the oil companies themselves who continue to claim record profits at the expense of every citizen of the world?
Jun 23, 2011 5:11PM
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Gas prices will only continue to rise, regardless of what some schmuck on wall street or in Washington says! It a Money thing. And the public knows good and well that the Big Oil and Gas Co's OWNS Washington and Wall Steet and all of it's worthless stuffed suits!!!

Jun 23, 2011 5:30PM
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They would have to release enough to really burn the speculaters and keep them from pouring money into oil futures,not going to happen.  Of course they could always do what needs to be done and keep the traders that are just pushing paper and not taking delivery of the oil out of the market and get some true supply and demand action going we would not have all this volatility in the futures market.  And Yeahh that ain't going to happen either. Wall Street will never give up that cash cow,  and nobody in Washington has got the balls to stand up to them and make it happen  
Jun 23, 2011 5:16PM
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Weren't we told when we invaded Khadafy that Libya wasn't that big of an oil producer that it would affect the supply?
Jun 23, 2011 5:22PM
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Now that's nice! Instead of regulating speculators, we shortchange our national emergency stash?

Meanwhile, the price drop indicates the speculators are already moving on to the next harvest. But it does seem to indicate that demand and supply play a lesser role in prices than speculators do.

Jun 23, 2011 5:43PM
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Here is what I don't understand. The article says that oil is going lower but that doesn't mean that gas prices will drop for sure? How does that work exactly?  If there is one thing history has taught us is that prices only go up....they only go down just so they can go higher in the future. Case in point gas....what way back when it was like a dollar a gallon? now its pretty close to 4? gas will only continue to rise, it will only go down if and only if the greed of the oil companies ceases, and I don't think we will ever see that.  Gas prices affect every single sector of the American economy, where we shop how we shop, what vehicles we drive (if you buy an 8 cylinder now your just asking to hurt at the pump), and the list goes on and on from there.  If we drilled our own oil here in the states we wouldn't get bent over every time a natural or political disaster happens HALF THE WORLD AWAY! If we provided our own oil (which by the way is just a drill away) then we wouldn't have too worry about such fluctuation in gas prices. Here is my question if oil prices don't necessarily guarantee gas prices will go down....then why in the world does the average American care about oil prices? I don't wanna see the price of oil per barrel on the news unless it translates into savings at the pump. I don't care what we are told or why the price goes up there is no reason for gas to EVER reach 4 dollars a gallon or even close unless you add human greed into the equation.
Jun 23, 2011 6:26PM
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We the people, need to take back our country. Oil, war, recession, all hails from the politicians and their greed. Congress gets full benefits while many Americans either pay up the wazoo for mediocre benefits or worse have none at all. They all rub each others back and laugh at the little people who struggle to survive, put gas in their cars, get jobs, feed their children. We need to take our country back, now, today, but everyone has to be a part of it, therefore it will never happen.
Jun 23, 2011 6:14PM
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Oil speculators should be lined up and shot!!
One percent of world fat kats get richer, thirty percent will tolerate and of course sixty nine percent will get screwed even more. 
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