Gas prices hit 100-day low as US oil cushions global turmoil(Read article summary)
Gas prices in the US have fallen to the lowest level in 100 days, and drivers have strong US energy production to thank. Analysts say the domestic oil boom is softening the impact that turmoil in Iraq and Ukraine would otherwise have on prices at the pump.
Sait Serkan Gurbuz/St. Joseph News-Press/AP
Feeling relief at the pump? You should be. US gas prices reached a 100-day low Thursday, and analysts expect prices to continue falling.
The drop in prices comes at a time when energy costs might otherwise be skyrocketing. New US sanctions on Russia target the largest-producing oil company in the world. A downed commercial airliner has ratcheted up tension even further in Ukraine. Violence and unrest continues in Iraq and elsewhere across the Middle East. But increased US production and a return of Libyan exports have reassured oil markets, and that helps keep gas prices in check.
Thursday’s average price of $3.58 a gallon was the lowest price US drivers paid since early April, according to averages released by GasBuddy.com, a website that tracks gas prices nationwide. Gas prices have held steady or dipped lower for the last 20 days – the most consecutive down days since June and July of last year. And for now, it looks like consumers can expect a break at the pump for the rest of the summer.
“We anticipate retail price decreases from 10 to 20 cents a gallon over the next two to three weeks, depending on what part of the country you’re in,” says GasBuddy senior petroleum analyst Gregg Laskoski, adding that prices have declined four cents this week alone.
Market watchers are tracking oil production and potential disruptions in Iraq, Libya, Ukraine, Venezuela, and Nigeria, but no major shocks are expected. And even recent turmoil in Iraq has had minimal impact on US drivers, with prices at the pump cushioned by the US’s robust domestic oil production.
“There’s been an extraordinary energy boom that’s helped soften the blow that occurs from geopolitical events,” Mr. Laskoski says in a telephone interview Friday. “Consumers are protected from those events with the low cost of crude that’s extremely abundant.”
Automotive group AAA said that gas prices were falling this week as stability increases in Iraq.
“[T]he retail price at the pump continued to tick lower following the Independence Day holiday due primarily to lower crude oil costs as the situation stabilizes in Iraq,” AAA said in a report released Monday.
The downing of a Malaysian Airlines jetliner in Ukraine Thursday threatens to reverse that trend. The news sent US crude oil prices up nearly $2 to close $103.19 a barrel Thursday. Brent crude rose by 72 cents to end Thursday at $107.89 a barrel. Both were slightly down as of midday trading Friday.
Other unforeseeable events – like hurricanes and tropical storms, or sudden global instability – could also cause unexpected increases in gas prices.
But otherwise, the outlook is promising.
“The national average may continue to slide or remain flat, barring any geopolitical concerns, major hurricane or refinery disruptions,” AAA’s report said.