Gasoline prices likely to sink

Gasoline prices, already more than 60 cents a gallon cheaper than mid-summer's $4-plus, could fall well below $3 a gallon within six weeks, experts believe.

"Prices can go anywhere; it all depends how bad things get," said Don Bowers, who manages Ross-based Superior Petroleum Co.'s gasoline business. "If it gets real bad, we could see gasoline between $2 and $3 a gallon within four to six weeks."

"I believe that $3 a gallon or less at the pump will be a common price within the next few weeks," said Tom Kloza, senior oil analyst with Oil Price Information Service in Rockville, Md., in his Speaking of Oil Web site on Monday.

Kloza said he bases his retail projection on current wholesale prices. Given that retail prices generally are some 60 cents a gallon more than wholesale, even the country's highest wholesale price, in California, is $2.46 a gallon.

A general economic slowdown, rapidly spreading worldwide, is the primary reason gasoline prices are falling, experts believe. So is speculators fleeing the commodities markets.

"Going from summer to fall, there always is a lot less usage, but this year there was even less usage," Bowers said. "Speculators pushed up prices as much as they could until people ran out of money, and when they run out of money, they do other things. People now are doing other things."

AAA East Central's weekly Fuel Gauge gasoline survey found the average price this week for a gallon of regular gasoline from a self-service pump dropped 14.5 cents from last week, to $3.408 from $3.553.

One big problem with lower gasoline prices is that the farther the price falls, the worse shape the national economy is in, said Duquesne University Kent Moors, director of the Energy Policy Research Group at Duquesne.

"The problem is, if the price goes down more, we're in a great deal of economic difficulty. People will be less concerned with lower gasoline prices for their SUVs and more concerned that when they get into that SUV, will they have a job to go to."

Concerns about the success of the federal government's $700 billion banking bailout, shrinking demand worldwide for petroleum products and concerns for a national recession have combined to grab the crude oil and thus the gasoline markets, with falling prices the result, Moors said.

"Oil prices are lower because the global economy stinks," Kloza said.

The federal government's Energy Information Administration on Tuesday issued its latest short-term energy outlook, in which it projects the average price for regular gasoline from a self-service pump during the final three months of the year will be $3.34, and $3.56 for the entire year. The annual figure is 75 cents higher than 2007's $2.81 average and exactly the same as the agency's 2009 average price projection.

Moors and Kloza cautioned drivers not to get used to lower prices. Moors said that the national credit crunch already is affecting some small-marginal oil producers that are shutting down or curtailing operations because they can't get financing to drill for crude oil.

Kloza said don't be fooled into believing the world suddenly has become conscientious about saving crude oil/gasoline, or willing to sacrifice for the good of all.

""We shouldn't be delusional about the prospects for considerably higher prices in 2009 or 2010 or beyond," Kloza wrote. "The world hasn't lost its appetite for oil -- we'll get drunk again."

Cheaper Gas Prices, but Less Demand