Gas Drops Below $3 Nationwide
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.
© 2009 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. 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.
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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
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).
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.
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...
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?
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.
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.
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??????????