Oil’s two-week nosedive starting to show up at gas pump
Published Friday, July 25, 2008
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Stumble It!NEW YORK — Whether or not any bubble has burst, Americans now live in an economy where the prospect of a gallon of gas for less than $4 is cause for relief.
That barrier may be broken as early as this weekend, as a two-week nosedive in crude prices begins to ripple out to gas stations nationwide.
The national average for a gallon of regular pulled back to just above $4 a gallon and oil tumbled to its lowest point in weeks Friday on the belief that prices have yet to reflect just how badly demand has deteriorated in the United States, the world’s thirstiest oil consumer.
Prices at the pump are poised to dip even further, and could cost as much as 25 cents less by Labor Day, AAA spokesman Geoff Sundstrom said.
“People say typically prices shoot up like a rocket, fall like a feather. But this time ... it looks like it’s different,” Sundstrom said. “The retail sector is interested in bringing these prices down as fast as they can to stimulate business in their convenience stores.”
In the trading pits, oil continued on a two-week sell-off. Light, sweet crude for September delivery fell $2.23 to settle at $123.26 a barrel in on the New York Mercantile Exchange. Earlier the contract dropped as far as $122.50, its lowest point since June 5.
Many analysts say the market’s momentum points to further declines. Crude has fallen in seven of the last nine sessions, and is down more than 16 percent from its peak above $147 a barrel earlier this month.
“There’s just nothing sufficiently bullish coming into the market right now to sustain a rally,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. “We’re just seeing a new theme in which demand has become a very important part of the equation.”
Still, prices remain about 65 percent higher than they were this time last year.
In the latest sign that Americans continue to struggle with soaring energy prices, filling station operators hungry for business ratcheted down the average price for a gallon of regular gas by 2 cents, according to auto club AAA, the Oil Price Information Service and Wright Express.
Sundstrom said such a large decline suggests demand is fading. Retail prices have fallen about a dime per gallon in just the past week.
“We’re seeing a historic change in driving habits,” Sundstrom said, although he added that “we still have a long way to go before we get back to the comfort zone, if you will, for the consumer.”
While all that talk on trading floors has shifted to demand worries, analysts note that prices could rebound on even a temporary cut to supply.
The abduction of five crew members from a Swedish boat in Nigeria’s oil-producing Niger delta region was a reminder that much of the world’s oil is still pulled from politically volatile regions. The African nation is a major supplier to the U.S. Earlier in the week, Nigerian militants threatened to blow up pipelines in the region within a month.
Investors are also watching for any sign in increased tension between Iran and the West.
“There is a palpable sense of exhaustion amongst traders after the steep sell-off of the past two weeks, and many think we are in for a period of stabilization,” said Addison Armstrong, director of market research at Tradition Energy. “This notion is being supported by renewed concerns about events in Nigeria and the Middle East.”
In other Nymex trading, heating oil futures fell 4.42 cents to settle at $3.5229 a gallon while gasoline futures lost 2.71 cents to finish at $3.0323 a gallon. Natural gas prices sank 23.9 cents to settle at $9.084 per 1,000 cubic feet.
In London, September Brent crude fell 97 cents to settle at $124.52 a barrel on the ICE Futures exchange.
Community Discussion
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I have not seen any drop in prices locally!
Please tell me why we are paying 50 cents more than the national average. We have never had to pay this much more than the rest of the US.
The last time the oil companies were asked why Fairbanks was paying so much for gas they responded that they charge what the market will bare. And folks wonder why the oil companies are not well liked,,,,,
Dropping 25 cents? OH WE'RE SAVED!!!! I'll only have to pay $4.40 now!
The past two weeks the local prices were fairly steady.
Back east my relatives saw a 10 cent drop so far, but they got a market.
The Fairbanks market, follows the rise but the drops are always price for "future" deliveries.
Well. For one thing, the North Pole Refinery gets all its oil from the State of Alaska (royalty oil) and pays a premium to get it. So, every gallon of gas they produce is from some of the highest priced oil in the U.S. of A. A premium to the state coffers. A premium from your pocketbook. Go figure that all you "it's our oil" folks.
Figures; I just got 292 gallons of fuel oil cost me $1300. Now you know the price will go down!
Grow your own Oilgae...
http://cc.pubco.net/www.valcent.net/i/mi...
Get some acreage in a sunny spot, build some greenhouses, and get a good diesel powered fishboat that has plenty big fuel tanks.
When greedy people leave Alaska, the population will be 300,000 and it'll be a nice place to live again.
Darkhorse, do yourself a favor and google Flint Hills North Pole, then do us a favor and shutup about a refinery 11 miles away overcharging for gas and diesel.
Some real marketing going on here. Double the price, knock off a penny and call it a SALE. Anyone remember what the price of a barrel of oil was 6 months ago??? A year ago???
YEP..."All THAT THE MARKET WILL BARE". Hum-m-m...Wonder what is the definition of PRICE GOUGING??? Then again, wasn't the excuse that the oil prices were being driven by the growing markets in India and China??? Must have stopped growing over there???
Pavel...pivel! Once again, a voice with no facts. Flint Hills makes ZERO . . . THAT'S RIGHT ZERO . . . low sulfur diesel which is required for modern diesel engines. That means that ALL the diesel sold at local service stations comes from points south. Next, about 80% of the home heating oil distributed in the Interior comes from the Petro Star refinery in North Pole (owned by the Arctic Slope Regional Corporation). Petro Star doesn't make gas. Flint Hills does. They make it from 100% state royalty oil for which they pay market price plus a premium. Those are the facts, Pavel.
Sure would like to see the affect of crude dropping $24 a barrel in the last two weeks, its still $4.49 at Freds and Safeway as of this afternoon, which means it hasn't dropped a red cent from its all time high! I did look it up and folks in Oklahoma and Kansas are paying as low as $3.52 a gallon for gas....what a joke!
If Flint Hills is making gas from OUR OIL, why can't we get a break?
One more question. Has any Executve from Tesoro, Holiday, Flint Hills, or any other company that claims to care about the community read that story?
I sure hope the 7 dollar a gallon gas in Galena, and, from what I have heard recently, 9 dollar a gallon gas in Bettles will drop soon!! (yeah, right) Gas will not go down significantly in the near future. Good Luck to everyone this winter, and Distant Thunder, you are right....when many leave, it will be nicer to live here.
Quit whining and do something about it if you don't like it. Here is the direct line to the regional managers of fuel sales responsible for the Fairbanks market. Give them a call and ask why the price has not dropped , leave a voice mail if you have to. The squeaky wheel does get the grease.
Fred Meyer Fuel - Cliff Haldwell 1.800.858.9202 ext.3734
Holiday Stores - Bob Nye 1.800.745.7411 ext. 8737
Sourdough/Petrostar - Mark John 907.339.6627
Flint Hills - Jeff Cook 907.488.5104
Were are but a dot on the map to these guys sitting in their big offices down in the lower 48. It is easier for them to lower the price then to have to deal with angry customers calling them asking why the price has not dropped.
If I were a grocery retailer in Oklahoma or Kansas right about now, I'd have a very special pricing plan for Mr. Cook.. I'd think that charging him $30.00/lb. for ground beef would be a good start.. And perhaps a space-rental fee for standing in the store while he shops and digs for his cash..
Maybe then the parasite would get the point.
I wonder what kind of security detail he's travelling with these days??
A guy can dream, right??
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