Drive time: Holiday revelers can give thanks for $2 gas
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.
Not-so-open roads: Drivers trickle through Times Square in New York on Oct. 25.