Prices fall as demand for oil drops

Tag : Fuel Oil Gas

M otorists are finally getting a break at the pumps.
The average price of regular gas in Massachusetts fell below the $4mark yesterday for the first time since early June - and fuelexperts say prices could fall another 25 to 40 cents as the priceof crude oil tumbles on world markets.
The ultimate reason for the declines: lower national and globaldemand for oil products, as economies slow and motorists cut backon gas usage by taking public transit, buying more fuel-efficientcars or simply not driving as much.
“There’s less demand,” said Art Kinsman,spokesman for AAA Southern New England.
Unless a major event disrupts fuel supplies, Kinsman said gasprices could fall another 25 cents by Labor Day, providing badlyneeded relief for consumers already burdened by high prices forfuel, food, clothes and other everyday items.
Peter Beutel, an analyst with Cameron Hanover, was guardedly moreoptimistic. He said prices could fall about 40 cents a gallon inthe next couple of weeks - and an additonal 20 cents or so by LaborDay if there aren’t major disruptions.
But all bets are off if there’s a confrontation withoil-producing Iran , a hurricane that harms oil-distribution lines or even talk ofinterest rate cuts by the Federal Reserve, he said. The price ofoil, which is pegged to the U.S. dollar, rises when interest ratesfall.
According to AAA Southern New England, the average price of regulargas in Massachusetts was $3.98 yesterday, down 11 cents from itsJuly 8 high. The national average also fell below the $4 markyesterday, to $3.95.
Kinsman said AAA Southern New England’s survey found a highprice of about $4.39 a gallon for regular gas and a low of $3.73.
Such a wide range indicates “markets are moving fast” -and downward at this point, he said. “There’s stillroom for a fall, barring any major negative event,” he said.
The price of crude oil has fallen from a high of about $147 abarrel to the mid-$125 range in recent weeks.