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Gas prices unlikely to fall as fast as oil
Source: Agencies |
September 27, 2012, Thursday
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US gasoline prices should be at a record for early October when President Barack Obama debates Republican challenger Mitt Romney next week in Denver.
The focus of the debate will be on the economy and domestic policy. High gas prices usually cut into consumer spending, which accounts for about 70 percent of US economic activity.
Although oil has dropped US$9 per barrel, or 9.1 percent, in less than two weeks, gas prices tend to lag changes in oil and experts don't expect a significant move lower until the middle of October.
The US average price for gas was US$3.805 per gallon (US$1 a liter), a record high for this time of year, and up 31 cents from the same date last year
Gas has remained stubbornly high although economic growth is tepid and demand for gasoline is lower than a year ago. Oil rose about 25 percent from late June through late August. More recently, refinery issues have tightened the supply of gas on both coasts. And there are lingering effects from Hurricane Isaac, which disrupted refineries and imported oil deliveries along the Gulf Coast.
It probably will be a few more weeks before supplies build back up in certain markets and lead to a noticeable decline in pump prices, said Tom Kloza, chief oil analyst at Oil Price Information Service.
Benchmark oil ended at US$89.98 a barrel yesterday, down US$1.39, or 1.5 percent.
Oil last closed below US$90 per barrel on Aug. 2. Wednesday's drop came as protests in Greece and Spain offered visible reminders that Europe still is struggling to resolve its debt crisis. The protests are occurring ahead of spending cuts and tax hikes designed to help those countries control debt. Such austerity measures crimp the need for oil and oil byproducts like gasoline and diesel.
Brent crude, which is used to price international varieties of oil, fell 41 cents to US$110.04 per barrel in London
Other energy futures prices on the New York Mercantile Exchange:
- Heating oil was flat at US$3.1068 per gallon.
- Wholesale gasoline rose 11.4 cents to end at US$3.08 per gallon.
- Natural gas gained 9.9 cents to US$3.023 per 1,000 cubic feet.
The focus of the debate will be on the economy and domestic policy. High gas prices usually cut into consumer spending, which accounts for about 70 percent of US economic activity.
Although oil has dropped US$9 per barrel, or 9.1 percent, in less than two weeks, gas prices tend to lag changes in oil and experts don't expect a significant move lower until the middle of October.
The US average price for gas was US$3.805 per gallon (US$1 a liter), a record high for this time of year, and up 31 cents from the same date last year
Gas has remained stubbornly high although economic growth is tepid and demand for gasoline is lower than a year ago. Oil rose about 25 percent from late June through late August. More recently, refinery issues have tightened the supply of gas on both coasts. And there are lingering effects from Hurricane Isaac, which disrupted refineries and imported oil deliveries along the Gulf Coast.
It probably will be a few more weeks before supplies build back up in certain markets and lead to a noticeable decline in pump prices, said Tom Kloza, chief oil analyst at Oil Price Information Service.
Benchmark oil ended at US$89.98 a barrel yesterday, down US$1.39, or 1.5 percent.
Oil last closed below US$90 per barrel on Aug. 2. Wednesday's drop came as protests in Greece and Spain offered visible reminders that Europe still is struggling to resolve its debt crisis. The protests are occurring ahead of spending cuts and tax hikes designed to help those countries control debt. Such austerity measures crimp the need for oil and oil byproducts like gasoline and diesel.
Brent crude, which is used to price international varieties of oil, fell 41 cents to US$110.04 per barrel in London
Other energy futures prices on the New York Mercantile Exchange:
- Heating oil was flat at US$3.1068 per gallon.
- Wholesale gasoline rose 11.4 cents to end at US$3.08 per gallon.
- Natural gas gained 9.9 cents to US$3.023 per 1,000 cubic feet.
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