Passing Gas Prices Samantha Jonas-Rongo
People at the pumps are griping less about gas as drivers enjoy the lowest fuel prices they’ve seen in years. Also at play are global forces. The U.S. has expanded oil production, but OPEC — an international organization representing oil producing countries; has decided against cutting output. Demand can’t keep up with supply, sending prices per barrel of crude oil down, experts say.
Prices vary from street corner to street corner depending on how fast one gas station eats through its inventory of gasoline. Prices change every day, but gas stations store gasoline underground and sell through inventory normally every three to five days.
The national average for a unleaded gallon of gasoline was $2.26 on Wednesday, based on AAA’s daily survey of 120,000 gas stations in partnership with Oil Price Information Service and WEX Inc.
Internationally, the top story obviously is the collapse of world oil prices, followed by the recent drop in natural gas prices. Clearly, the production of both oil and gas from horizontal wells has had much to do with that fall, although more probably is attributable to economic warfare being waged by Saudi Arabia against Iran and Russia. For the shale producers, the oil price crash means that the higher cost drillers will need either to retrench, drop out or keep pumping at a loss hoping to maintain their economic viability until prices rebound.
No one knows, of course, when that will be and how far prices will come back. Indeed, some believe prices can drop further. However, the fact that this supply exists means that Russia, Iran, Venezuela, Nigeria and all other oil-producing countries must adjust their national budgeting to reflect a lower price even in good times for oil and gas.