Gas Price Hit 5-year Low
Gasoline prices have hit a five-year low nationally, as well as in California, the LA Times reported. Analysts are predicting that gas prices could get as low as $1 per gallon.
Crude oil for January delivery increased $2.90 to $43.71 a barrel Monday on the New York Mercantile Exchange. Experts don't see a significant jump in momentum from consumers because of the suffering job market and lower demand for oil.
"The world has changed. I don't see any reason why $1 gasoline isn't possible, and $25-a-barrel oil is not out of the question," Phil Flynn, vice president and senior market analyst for the Alaron Trading Corp. in Chicago told the LA Times. "I don't think the downside is over. There is a lot of surplus oil out there."
In contrast, Fadel Gheit, senior energy analyst for Oppenheimer and Co., is one of the analysts saying that oil won't stay down, even if the historic price drop isn't quite over yet.
He told the LA Times, "Some of the same clowns who were predicting $200-a-barrel oil a few months ago are in the crowd predicting $25 a barrel. But just as we believed that oil above $100 was not sustainable by market fundamentals, oil below $30 isn't sustainable either."
"Even in the midst of this global recession, the world is still using 80 million barrels of oil a day. If production is cut back sharply and the oil companies keep reining in capital spending, it will come back to haunt us," Gheit added, explaining that the global economy would eventually improve and place higher demands on supplies.
Nationally, the average price of self-serve regular gasoline dropped from 11.2 cents to $1.699 a gallon. That was $1.30 below the price in the previous and was the lowest average since the $1.688 the Energy Department recorded on Feb. 23, 2004.