Drive time: Hol­i­day rev­el­ers can give thanks for $2 gas

The Washington Times Weekly - - National - By Bryce Baschuk

Happy hol­i­days are ahead for the mo­tor­ing pub­lic.

A warm-win­ter fore­cast and de­clin­ing crude oil prices are mak­ing an­a­lyst­sop­ti­mistic­that­manyAmer­i­cans will see $2-a-gal­lon gas by Thanks­giv­ing, de­spite OPEC’s promise­to­cut­pro­duc­tionby1.2mil­lion bar­rels per day.

“We be­lieve that in the next cou­ple of weeks, the na­tional gaso­line price will av­er­age at $2.05 per gal­lon,” said John Townsend, a spokesman for AAA Mid-At­lantic.

AAA based its pre­dic­tion on the premise that “the re­tail price of oil is­gen­er­al­ly60­centsper­gal­lon­more than the whole­sale price,” Mr. Townsend said.

The whole­sale price of gaso­line closed at $1.448 yes­ter­day on the New York Mer­can­tile Ex­change.

Gulf Coast res­i­dents are en­joy­ing the low­est re­tail gas prices in the coun­try,payin­gare­gion­alav­er­a­geof $2.10per­gal­lon,ac­cord­ing­totheU.S. En­er­gyIn­for­ma­tionAd­min­is­tra­tion (EIA). The West Coast has the high­est prices, at $2.41 per gal­lon, it said.

Sev­er­al­fac­tor­sare­con­tribut­ingto the plung­ing pump prices:

The Na­tional Oceanic and At­mo­spheric Ad­min­is­tra­tion is ex­pect­ing warmer-than-av­er­age tem­per­a­tures from De­cem­ber through Fe­bru­ary.

“If it’s a milder win­ter than pre­dicted,thede­mand­forhome­heat­ing oil should de­cline,” Mr. Townsend said.

U.S.petroleu­min­ven­to­rieshave re­mained above the five-year av­er­age, an OPEC spokesman said on Oct. 31. If in­ven­tory lev­els stay high, gaso­line prices could keep fall­ing, AAA an­a­lysts said.

Crude oil prices have not in­creased sharply af­ter the re­cent de- ci­sion by the Or­ga­ni­za­tion of Pe­tro­leum Ex­port­ing Coun­tries to cut oil pro­duc­tion.

OPECvot­ed­last­mon­th­to­cut­pro­duc­tionby1.2mil­lion­bar­relsper­day start­ing Nov. 1, but oil spec­u­la­tors won­der whether OPEC mem­bers will fol­low through with the plan.

“A lot of traders don’t think that OPEC will make the cut be­cause they think prices will con­tinue to fluc­tu­ate,” Mr. Townsend said.

Spec­u­la­tor­sweresur­prised­when oil prices hit a six-month low of $56.82onOct.20.Thep­rice­ofcrude then rose to $60.36 on Oct. 26 be­fore slid­ing to $58.73 by Oct. 31.

“The OPEC coun­tries will def­i­nitely cut their pro­duc­tion,” Omar Farouk Ibrahim, OPEC’s head of pub­lic re­la­tions, said in a tele­phone in­ter­view from the or­ga­ni­za­tion’s head­quar­ters in Vi­enna, Aus­tria. The next OPEC meet­ing, sched­uled for Dec. 14 in Nige­ria, will fo­cus on the mar­ket’s re­ac­tion to the pro­duc­tion cut, he said.

“For now, we don’t have any pre­dic­tions about how the mar­ket will re­act,” Mr. Ibrahim said. “But we do know that the mar­ket is sta­bi­liz­ing.”

“Even if they fol­low through with the pro­duc­tion cut, it’s still only a 4 per­cent de­crease in the to­tal out­put,”Mr.Townsend­said.“Thep­ump priceswe’reen­joy­ing­noware­much bet­terthanthep­rices­from­lastyear, and so are the crude oil prices.”

“Even if the prices de­cline at a penny a day, it won’t be long un­til we see a re­gional av­er­age of $2 per gal­lon,” he said.

AP

Not-so-open roads: Driv­ers trickle through Times Square in New York on Oct. 25.

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