Pump Prices Ease, Slightly
NEW YORK -- The price of U.S. oil has dipped significantly from the spring, but the decrease in the price at the pump has not been as notable. According to CNNMoney, the cost of U.S. oil has fallen 25 percent since reaching new highs in May. However, gasoline has only gone down 10 percent.
While motorists can expect to spend less to fill up their tanks over the next few months, they should not expect a huge discount.
Labor Day usually triggers lower gas prices as the country switches to less-expensive "winter gas." Because cooler air is less conducive to smog formation, "winter gas" doesn't need to be refined as much. The less-than-feared impact of Hurricane Irene and a tempering of hostilities in Libya should also be key contributors to lower prices, the news outlet reported.
However, analysts are still treading lightly. They said the lower oil prices seen in the United States recently do not truly reflect the actual price of oil in the global market. Plus, demand from the developing world remains strong.
"Our expectations are for crude to come a little lower, and that would be reflected in gas prices," said Phil Thompson, manager of market analytics at Mobius Risk Group, a firm that advises energy producers and big energy consumers.
He foresees maybe a 30- or 40-cent drop in retail gas prices, currently running around $3.60. Gas prices could fall below $3, he said, but that would require "a major event" like European countries defaulting on their debt, which could drive the dollar sharply higher, according to the report.