Gas Drops Below $3 Nationwide

Prices At Pump Approach Year-Ago Levels Even As Likely OPEC Cuts Push Oil Prices Higher

(CBS/AP)  The global economic crisis has driven oil prices down 50 percent since July, from a high of $147 a barrel to $74 today. That price decline set off a similar slide at the pump, reports CBS News correspondent Nancy Cordes.

The national average for a gallon of regular gas has plunged 86 cents in just one month.

In fact, gas is now below three dollars a gallon in 35 states. In eight of those states it's under $2.75 - like Missouri, where it's $2.57.

Prices dropped further below $3 a gallon on Monday and approached year-ago levels even as the near-certainty of an OPEC production cut pushed oil prices marginally higher.

Gasoline has fallen more than a dime a gallon since Friday, hitting a national average of $2.92 on Monday, according to auto club AAA, the Oil Price Information Service and Wright Express.

Pump prices have fallen 29 percent from their July record high of $4.114 a gallon and are only 10 cents higher than a year ago. That difference could be bridged this week if gasoline keeps falling at the current rate.

Energy industry analyst Peter Beutel told CBS Radio News that the price has dropped because the consumer has changed their driving habits.

"We're seeing gasoline demand down against a year ago. It’s the first time that's happened since 1983," Beutel said.

The pullback at the pump comes amid a dramatic turnaround in crude oil prices.

Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said Sunday that members plan to announce a "substantial" output cut at an extraordinary meeting that begins Friday in Vienna.

Analysts say OPEC countries have been alarmed by falling oil prices and want a production cut to prop up members' national budgets that only months ago were bulging with hundreds of billions in petrodollars.

Khelil, who is also Algeria's energy minister, said OPEC may cut output again at a meeting in December, and that the group considers the oil market oversupplied by about 2 million barrels a day.

Light, sweet crude for November delivery rose $2.29 to $74.14 a barrel in morning trading on the New York Mercantile Exchange. The contract Friday gained $1.53 to settle at $71.38; crude has fallen about 50 percent from its July 11 high of $147.27.

Venezuelan President Hugo Chavez said Sunday he would like prices between $80 and $90 a barrel.

On Monday, trader and analyst Stephen Schork called those comments "oddly conciliatory."

"Unfortunately for Venezuela ... and the rest of OPEC, $80 might not be enough for the bears ... at least in the short run," Schork said in his daily publication, The Schork Report. "After all, the people ... who (initially) denied the existence of the bubble and who have subsequently been telling us since $110 that the floor in oil is in ... are the same people who are now telling us oil cannot last below $80."

Americans radically changed their behavior after gasoline prices spiked above $4 over the summer. And there are signs that emerging economies like China have begun to slow.

Analysts say almost any OPEC action has already been priced in by investors.

"The market is factoring in a big cut. It will likely be as much as 2 million barrels," said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. "I think they will go pretty large just to change the sentiment."

Investors largely ignored an OPEC output reduction of about 520,000 barrels a day last month, focusing instead on weakening demand.

Vienna's JBC Energy suggested that - beyond an OPEC cut of at least 1 million barrels a day - a surprise in the form of Russia also reducing output in coordination with the Organization of the Petroleum Exporting Countries - may be in the offing.

"The likelihood of such a move should not be underestimated, as Moscow has recently been seen putting more emphasis on its relationship with OPEC, having sent Vice Premier (Igor) Sechin to attend the last meeting in September," it said in a research note.

In Paris, Nobuo Tanaka, the head of the International Energy Agency, urged OPEC not to cut production so as not to stifle the still-growing economies of countries like China, India and Brazil.

"We think that the current level of prices are still very, very high and the market very tight," he said.

In its monthly report last week, the Paris-based energy watchdog cut its forecast for oil demand this year by 240,000 barrels per day, and slashed its 2009 forecast by 440,000 barrels per day amid the global financial crisis.

Fears that turmoil in global financial markets will spark an economic slowdown in developed countries has helped push prices down.

Last week, news of rising U.S. oil inventories, falling retail sales and slowing housing starts fueled concerns that the world's largest economy may face a major recession that will undermine demand for crude.

"Oil demand in the U.S. will be a bellwether," Pervan said. "If the US, Europe and Japan go into a major recession, there's no reason we can't see $35, $40 a barrel."

In other Nymex trading, heating oil futures rose 6.08 cents to $2.2177 a gallon, while gasoline prices gained 3.29 cents to $1.699 a gallon. Natural gas for December delivery surged nearly 20.7 cents to $7.513 per 1,000 cubic feet.

In London, December Brent crude was up $1.97 to $71.57 a barrel on the ICE Futures exchange.

[libluv2cnsor]

CRANK UP THE PRODUCTION OF LARGE TRUCKS AND SUVS

More Republicans need gas hogs to go watch NASCAR in and sleep in the back face down being pillow biters at the Nascar Races.


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Posted by Colt8881 at 02:59 PM : Oct 21, 2008
+ report abuse


**********

dont forget those ''no war for oil'' protest caravans..CANT HAVE ONE WITHOUT A GOOD SIZED SUV to do it with..oh forgot..these liberals never got rid of them

[usclimey]

Hmmmmmm. Did the economic crisis drive gas to about 2.49/gal or is this Bush manipulating the price to help out McCAin. Don''''t be surprise if there is a gas price surge on say....November 05, 2008, no matter who wins the election. LOL

Posted by harbinger09

No it''s the democratic congress. (GOPers have blamed them for everything that Bush has done wrong in the last two years - let''s get some credit while we can).

[usclimey]

don''''t remember any. Do you?

Posted by txgrouch2007

How''s about the first windmill farms? How about millions invested into more efficient fuel and solar cells? How about the first GM electric car? That took me 30 secs. I''m sure I can come up with more if you wish.

[dredre2k]

S P E C U L A T I O N... was the reason why oil ballooned to to $147 a barrel. Oil was the only safe investment at the time and speculators poured their money in... Then the bubble burst and gas is correcting to the price it should be, plus consumers have cut back. It amazes me that none of the analysis in this article have mentioned how the destructive force of speculation artificially inflated the price of gas.

[txgrouch2007]

Ever since Carter, Democrats have been talking about alternate energy sources. Now Obama is talking about them.

And yet, in the Clinton years when we supposedly HAD THE MONEY to do it, WHAT ALTERNATIVE ENERGY SOURCES were developed???

Yah, Democrats are good at TALKING about it...

[txgrouch2007]

remember the .75 to $1.00 gas prices in the final couple of months with Clinton
Posted by marcosis78 at 12:18 AM : Oct 21, 2008

Remember all of the ALTERNATIVE ENERGY SOURCES that were developed in the Clinton years, when we supposedly HAD THE MONEY TO PAY FOR IT???

I don''t remember any. Do you?

[txgrouch2007]

I''''ve said it before, Clinton gets a BJ under the oval office and the republicans wanted him out, Bush sells out the country and he''''s applauded? Give me a break! Bush should have been impeached a LOOOOOOONG time ago. His whole administration should have actually.
Posted by marcosis78 at 12:17 AM : Oct 21, 2008

Speaking as a stauch Republican, let''s compromise.

First, BUSH STINKS. He is now a strong contender for Worst President, although he still hasn''t declared war on Utah yet so he has a ways to go. But there are a few months left in his term in office, and there''s no telling what could happen...

Let''s compromise. HALF of the problems we are having today are the result of things that happened in the Clinton years, and we''re feeling the effects now.

The OTHER HALF of our problems are the result of Bush. That includes stupid things he did, PLUS his total failure to correct all the stupid things Clinton did and Bush just left them in place FOR EIGHT YEARS.

Our government has failed us. Our government has become our enemy. IN BOTH PARTIES.

[txgrouch2007]

The whole financial disaster, including both oil and food prices have been deliberately engineered by the Elite, The Rothschilds, Rockerfellas and guess what, their Muppets Bush, Brown and Zarkosy
Posted by drinuk at 04:18 AM : Oct 21, 2008

And the Kennedys and the Clintons.

Pelosi, Frank, Paulson, Bernanke and their other cohorts are their henchmen.

[txgrouch2007]

I''''ll still live like gas is $4/gallon and continue to conserve to keep my costs down, but I want to be prepared for higher energy prices down the road.
Posted by OneWorldUSA at 04:52 AM : Oct 21, 2008

They''ll take all of that back and more when the price jumps to $6 after the election.

VOTE OUT *ALL* INCUMBENTS!!!!

DO IT ***NOW*** WHILE YOU STILL HAVE THE CHANCE.

Think about this - if they''ve done this much HOW LONG BEFORE THEY CANCEL ELECTION DAY??????????

[harbinger09]

Hmmmmmm. Did the economic crisis drive gas to about 2.49/gal or is this Bush manipulating the price to help out McCAin. Don''t be surprise if there is a gas price surge on say....November 05, 2008, no matter who wins the election. LOL

[oneworldusa]

It was costing me $48 to fill my tank, now it costs me $30. I''m putting the other $18/week in a special fund to pay for gas again if it goes up. In other words, I''ll still live like gas is $4/gallon and continue to conserve to keep my costs down, but I want to be prepared for higher energy prices down the road.

[drinuk]

The whole financial disaster, including both oil and food prices have been deliberately engineered by the Elite, The Rothschilds, Rockerfellas and guess what, their Muppets Bush, Brown and Zarkosy are now arranging a World meeting to re-arrange currencies and power and to tell us this must never happen again, whilst their dream of World Government comes to fruition.

They wish to take a larger slice of the cake excluding the developing countries and giving themselves even further control over all our lives. It is hardly surprising that Putin is kicking off right now, he is sick of their interference, as are the Indian and Chinese governments.

Opec is not included in their new dream or their cartel, they will have little option but to play along. McCain and Obama, whoever is elected, will have no choice either, these people will cause more hardship and strife using the office of Pesident and government as simply another tool in their evil ambition.

[oneworldusa]

OPEC did this under the Carter administration. When he revealed a plan to reduce dependence on foreign oil, OPEC dropped prices for years to ensure it would not be ''wise'' to invest in alternatives while fuel cost was low. As a result, the plan was scrapped. Now, OPEC thinks the global economy is faltering and if nobody can afford gas, they can''t sell any, so, the prices go down. However, this time, we are moving forward with alternative energies and high-efficiency vehicles. They are not going to stop us this time.

[edward1975-2009]

marcosis78: This also icludes all members of Congress, who have been little more than a rubberstamp for him. After all they have to pass whatever Bush has asked for.

[marcosis78]

It''''s time to hit the road again....thank God for lower gas prices!!!!

Apparently you dont remember the .75 to $1.00 gas prices in the final couple of months with Clinton, and THAT was considered high. Prices have quadrupled since then.

[marcosis78]

I think its horrible that the Saudis are just adding to the economic slide and Bush is laughing about it. The Saudis want to, "protect profits" so they decrease production. Its BS. I find it pathetic how Bush and his Arab friends are treating America like a company, which he has no idea how to run, rather than a country. I''ve said it before, Clinton gets a BJ under the oval office and the republicans wanted him out, Bush sells out the country and he''s applauded? Give me a break! Bush should have been impeached a LOOOOOOONG time ago. His whole administration should have actually.

[edward1975-2009]

This report was released on the heels that the government will bailout oil companies to insure that they continue to reap the record profits they are accustomed to over the last decade, while providing no relief to struggling Americans, who must decide to either put food on the table or gas in their cars. This was heralded by both Bush and the rubberstamp Congress as a necessity to insure big businesses continued happiness. More later.

[aloera19]

It''s time to hit the road again....thank God for lower gas prices!!!!

[valentin73]

WHATEVER HAPPENED TO LONG-AWAITED ELECTRIC CAR?!!!

I AM READY TO PUT THE OIL COMPANIES AND THEIR EXECUTIVES OUT OF WORK...........................

[jw218389]

BIG OIL''s LAST attempt to save G.W. McCain''s campaign!

Lowered just like the last two (s)elections - Bush''s buddies lowering the price to gain votes...

BUY OIL - IT WILL GO RIGHT UP AFTER THE ELECTION - Especially if George W. McCain "wins"!!!