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Falling Oil Prices Should Help Drivers January 6, 2007

Posted by Jay Medina in News and Information.

I found this on MyWay.com.  Looks like good news overall.  Do you remember when gas prices were $1.09 to $1.50 back in 1999 and 2000?  Was it just me?  Please comment on this entry and let me know what you remember gas prices being.

It seems like we get excited now if gas is $2.15 a gallon.  So, it seems gas prices have gone up over 100% to 200% (when gas was $3.00 a gallon last year) in just 5 years time. When was the last time you increased your salary by 100% to 200% in that short of a time?

However, good news is good news, and this is definitely some good news:

Falling Oil Prices Should Help Drivers

Saturday January 6, 1:36 AM EST

NEW YORK (AP) — U.S. drivers could start seeing lower prices at the pump as early as this weekend, thanks to the cascading price of crude oil and a seasonal dip in gasoline, analysts say.

A gallon of regular unleaded gasoline costs an average of $2.325 across the country, according to the AAA.

“That’s probably going to be the highest price you pay in January,” Oil Price Information Service analyst Tom Kloza said. “We’re going to get a nice little energy price dividend in January: If you’re buying heating oil, you’re going to pay a lot less than last year, and we’re definitely going to be paying less for gasoline than we did in December.”

Gasoline prices typically fall in January amid weaker demand, Kloza said, before perking back up around Valentine’s Day and rising through the summer.

Also helping to temper gasoline prices is the recent slide in crude oil prices. Light, sweet crude for February delivery dropped as low as $54.90 Friday — the lowest price in 19 months — before climbing back to settle at $56.31, up 72 cents on the New York Mercantile Exchange.

After sharp drops on Wednesday and Thursday, crude prices fell nearly 8 percent for the week, the biggest one-week drop since April of 2005.

February Brent crude on London’s ICE Futures exchange rose 53 cents to settle at $55.64, after earlier dropping as low as $54.50.

Gasoline prices rose less than a penny to $1.493 after earlier falling as low as $1.46.

Kloza, though, said drivers shouldn’t expect retail gasoline prices to drop as steeply as crude prices. Many retailers were unable to pass along higher wholesale costs in December, and they’ll likely hold onto some of the price drop for themselves, he said.

A warmer winter has meant less demand for heating fuels, and the National Weather Service is forecasting continued mild conditions in the eastern United States. Temperatures could reach the upper 60s in New York on Saturday before cooling off but remaining above normal into next week, meteorologist Dennis Feltgen said.

Another factor is some investment and pension funds leaving commodities and moving money back into stocks, said Phil Flynn, vice president and senior market analyst at Alaron Trading Corp.

“We’re catching a falling knife right now,” he said. “I think we’re going to struggle to find a bottom in the mid 50s here and start working back up.”

But if prices fall further, they could drop close to $50, he said.

Ministers of the Organization of Petroleum Exporting Countries are waiting to see whether the lower price trend continues before taking any further action, the chairman of Libya’s oil company said Friday.

“We are concerned — of course,” Shokri Ghanem told Dow Jones Newswires from Tripoli. “We need to see if this trend continues as it has only been for two days so far.”

Natural gas in underground storage fell by 47 billion cubic feet to 3.07 trillion last week, according to the Energy Information Administration. Traders and analysts had been expecting a withdrawal of 55 billion cubic feet, according to a Dow Jones Newswires survey.

Natural gas prices rose 2.2 cents to $6.184 per 1,000 cubic feet.

“It now seems that we might get some colder weather after January 20th, but some are wondering if that could be too little, too late,” analyst Peter Beutel of energy consultancy Cameron Hanover wrote in his daily note.

U.S. crude inventories declined last week by 1.3 million barrels to 319.7 million barrels compared with the previous week, the EIA reported Thursday. Analysts on average had expected crude stocks to rise by 930,000 barrels, according to a survey by Dow Jones Newswires.

However, distillate inventories, which include diesel fuel and heating oil, increased by 2 million barrels to 135.6 million barrels as warm winter weather hurt demand. Distillate stocks were expected to increase by an average of 1.15 million barrels.

In other Nymex trading, heating oil futures rose less than a cent to $1.5658 a gallon and had dropped as low as $1.5334 earlier in the session.

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