Oil prices continue to fall, and are expected to go lower. Industry analysts say prices could fall as low as about $20 a barrel.
After reporting late last month that the national average gas price could slip to $2 a gallon before the end of the year, AAA reported Monday that statewide average gas prices already had dipped below the $2 mark in three states:
- South Carolina ($1.94)
- Mississippi ($1.99)
- Alabama ($1.99)
The national average hit $2.33 a gallon Monday after falling for 28 consecutive days, according to AAA. That means drivers are paying 6 cents less per gallon than they were one week ago, 33 cents less than one month ago and $1.06 less than one year ago.
AAA attributes lower gas prices to “the relatively low price of crude oil,” which ended last week at $44.63 per barrel on the New York Mercantile Exchange. And the association cites several reasons why it expects prices to continue to fall at the pump as autumn nears:
- Prices typically slide in the fall due to declining demand caused by the end of the busy summer driving season.
- The changeover to winter-blend gas, which is cheaper to produce, starts on Sept. 16 in many parts of the country.
- Consumers continue to benefit from an over-supply of oil and “could experience even lower prices at the pump if the price of crude oil remains relatively low and refineries are able to conduct planned seasonal maintenance without issue.”
The Wall Street Journal reports that gas supplies usually decrease leading up to the switch to winter-blend gas, but stockpiles unexpectedly increased last week, according to the U.S. Energy Information Administration.
Donald Morton, senior vice president at Connecticut-based investment banking firm Herbert J. Sims & Co., tells the WSJ:
“People were very disappointed to see a build last week in inventories and not a draw. … We have a lot of product, period.”
Last week’s increase in inventory came as Goldman Sachs analysts issued a report that said crude oil prices could fall as low as nearly $20 a barrel, CNN Money reports. The firm cited several reasons for lowering its forecast:
- Members of the Organization of the Petroleum Exporting Countries (OPEC) — especially Saudi Arabia, Iraq and Iran — will produce more oil next year.
- Non-OPEC oil producers are responding to lower prices better than expected.
- The growth in the global demand for oil is expected to slow next year, primarily because of China’s economic struggles.
How low have gas prices fallen in your area? Do you expect them to continue to fall? Share your thoughts with us below or on Facebook.