Plunging oil prices could go lower

Oil continued its month-long tailspin Tuesday, as the energy industry braced for the possibility that prices aren’t stabilizing anytime soon.

Falling prices could temporarily constrict the rapid growth of U.S. oil production, but energy industry experts don’t expect a significant pullback after the sector cut costs during the last downturn spanning from late 2014 to early 2016.

The possibility of what the energy industry calls a “lower-for-longer” scenario is gaining ground. It could accelerate the auto industry’s transition from fuel-efficient cars to sport-utility vehicles and give Americans unexpected savings in their summer travel budgets, while also raising the prospect of energy layoffs if prices dip further.

The price of West Texas Intermediate, the U.S. benchmark crude, dipped below $43 per barrel Tuesday, a level not seen since August 2016. It settled at $43.23, down 97 cents on the day.

Less than a month ago, oil was trading above $50 and experts were projecting prices of $60 to $70 later this year. That now looks unlikely.

“We had no idea it would be this low for this long,” said Patrick DeHaan, a petroleum analyst at GasBuddy.com. “It could go even lower for even longer.”

That’s because American producers are pumping oil at a furious pace, the Organization of the Petroleum Exporting Countries deal to extend production cuts is having limited effect and other foreign sources, such as Libya, are picking up the pace.

What’s more, U.S. energy exports are picking up, giving producers incentives to continue pumping, and President Donald Trump has signaled plans to loosen federal restrictions on drilling.

“All of these things have a tendency to put some downward pressure on prices, which is obviously what we’re seeing,” said John Graves, an energy consultant with Houstonbased Graves & Co. “You’re sort of talking to Captain Obvious here.”

For consumers, oil’s slide spells relief. The nationwide average of gasoline was $2.28 per gallon on Tuesday afternoon, down 4.4 cents from a month earlier and down 5.9 cents from a year ago. Some experts had previously expected that gas could be nearly $3 by now, but those projections fizzled out.

Gas prices in 47 of 50 states have fallen for two straight weeks, DeHaan said.

Although lower gas prices are good for consumers, they can undermine the energy business. During the last downturn, in which oil briefly fell below $30 in February 2016, energy companies slashed more than 440,000 jobs globally, according to Graves & Co.’s analysis.

This time around, Graves doesn’t expect significant job cuts.