Oil is slippery for a reason. It jumps and plummets. It just doesn’t stay still for long. Once in awhile, the price of oil seems to go up and down almost simultaneously, as it did in 2008. That’s when the price of crude oil hit its all-time high of $147 per barrel in the summer, only to plunge to $32 by the end of the year.
Suddenly, it seems like 2008 again.
Experts are predicting that oil could fall to $30 a barrel, as the European and Chinese economy tank, along with consumer demand, and the U.S. dollar strengthens. Combined with a glut in supplies, the price of crude oil is tumbling. Last week, it fell it a six-year low, at around $43 a barrel.
What that means for motorists, in some parts of the U.S., is gasoline prices below $2 a gallon.
The trend is there already, with fuel selling as low as $2.21 a gallon in Mount Pleasant Thursday morning.
The lowest prices in the Waterloo-Cedar Falls metro area were ranging from $2.49 to $2.59, compared to a statewide average of $2.63.
The trend is for prices to fall as the weather cools down and stations switch to cheaper, winter blends, beginning Sept. 15.
In the fall, gasoline production typically slows in the U.S., as oil refineries undergo maintenance. Shorter supplies generally create price increases, but demand also goes down as the traditional summer driving peak season ends. This year, falling demand is predicted to outweigh declining supplies, adding more downward pressure on prices, experts say.
But, again, oil is capricious, and before gas prices go into any sustained dive, we can expect a temporary upward blip in prices for the next week or so, said Gregg Laskoski, senior petroleum analyst with Gasbuddy.com, which tracks prices daily.
A problem at the seventh-largest refinery in the U.S., in Whiting, Ind., experienced a technical glitch last week. The BP refinery supplies much of the Great Lakes region’s gasoline, Laskoski said.
“The Explorer Pipeline from Tulsa (Okla.) to Chicago is going to bring some relief to the region, but it’s going to take about 10 days, so you’re going to see some high prices in the Great Lakes region and possibly some neighboring states,” Laskoski said.
Some of those higher prices will ripple into Iowa, although “to a much lesser extent,” Laskoski said.
Indeed, priced across the Waterloo-Cedar Falls area jumped by about 3 cents a gallon last week, although spikes in the Great Lakes area could exceed 30 cents a gallon before the problem is fixed, Laskoski said.
What happened at the Indiana refinery was unclear, Laskoski said.
“They haven’t issued any statement, but that’s not uncommon because refiners generally play these things pretty close to the vest,” he said.
Whether oil reaches the $30 level, no one can predict, Laskoski said.
“Obviously, we can’t rule it out,” he said. “I don’t know whether or not all of the folks following the industry would agree with that (prediction); I don’t think they would.”
What is known is that oil will be trading in a “pretty low range” below $50 “for the foreseeable future,” Laskoski said.
Oil’s 2015 peak is $62 a barrel. There’s no telling when the price will be that high again, Laskoski said.
“There’s just a glut of product that outpaces consumer demand both in the U.S. and on a global scale,” he said. “We’ve seen the economy in Western Europe slow down, and demand there has, too. Same in China.
Last week, China devalued its currency, and that’s a big part of global oil trading, Laskoski said.
“The U.S. dollar appears stronger in comparison to those currencies and that contributes to downward pressure on commodity prices, including crude oil,” he said.
This article was written by Jim Offner from Waterloo-Cedar Falls Courier, Iowa and was legally licensed through the NewsCred publisher network.