While declining oil prices over the last week have not necessarily caught the attention of consumers as much as they have speculators and impacted businesses, the falling gas prices have. Friday (January 22) marked the seventh consecutive day of falling fuel prices with the current national average at $2.73, according to Wright Express and the Oil Price Information Service.
The Energy Information Administration said a in a report Thursday, that US crude inventories were up by 3.9 million barrels last week. This coincided with a fourth successive weak of falling demand. Higher inventory levels and lower demand ultimately creates a buyer’s market. Of course, too much of a buyer’s market could prompt action by OPEC, whose leaders have publicly stated a desire for $80-plus crude prices.
Despite the recent slide, the national average for gasoline is still higher than it was on any day during 2009. Oil prices have climbed from around $40 to $80 over the last 10 months, with an energy rally that correlated with the improving sentiment on the hopes for a US economic recovery.
January has not been as prosperous for oil, with jobs data and other economic concerns weighing on consumers and businesses. Consumers appear to still be in conservation mode with driving and many businesses are still hesitant to expand transportation and business. Gas prices have followed suit with oil.
Many US refineries have attempted to deal with higher costs of crude oil by cutting gasoline production. This is in an effort to pass along costs to customers. So far, limited demand has won out and gas prices have remained in check to start off 2010. On Friday, the price for benchmark crude for March delivery was $75.42 on the New York Mercantile Exchange. This was down 66 cents from Thursday’s close. A stronger dollar has also been pushing against higher crude and higher gas prices. It follows that the more valuable the dollar the less of them it takes to buy gas.
Despite the seven days of price declines, a gallon of gas is still 14.3 cents more than it was a month ago. The $2.727 national average price is also down 87.7 cents from where it was to start 2009.
Written by Neil Kokemuller
