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Gas price drop slow to reach Idaho
NEW YORK (AP) -- While oil prices continue to drop in recent weeks, tumbling more than $2 a barrel Tuesday and finishing at their lowest level in seven weeks, the decline that is starting to affect prices at the pumps in much of the nation is slow to hit Idaho.
The drop -- which surpassed $4 a barrel at one point during the day -- was a throwback to oil's nosedive over the past two weeks and outweighed supply concerns touched off by a militant attack Monday on two Nigerian crude pipelines. It was oil's seventh decline in the last 10 sessions. The decline in oil prices has begun to affect the cost of gas. A gallon of regular unleaded averaged $3.96 on Tuesday nationwide compared with an average national price of $4.09 per gallon a month ago, according to AAA's Daily Fuel Gauge Report, it's Web site located at www.fuelgaugereport.com. Idaho, however, has yet to see the declines. The average price for a gallon of regular unleaded in the Gem State was $4.14 on Tuesday compared with $4.10 a month ago. Pocatello averaged $4.10 per gallon for regular unleaded on Tuesday compared with $4.01 a month ago.
Light, sweet crude for September delivery fell $2.54 on Tuesday to settle at $122.19 on the New York Mercantile Exchange. It was the lowest settlement price for a front-month contract since June 10. Earlier, prices fell to $120.42, also the lowest level since June 10. Oil has now fallen more than $25 from its trading high of $147.27, reached July 11. More concerns that crude's run-up over the past year has pushed prices to unsustainable levels fed Tuesday's decline. The U.S. Transportation Department said Monday that U.S. drivers logged 9.6 billion fewer vehicle miles in May -- or 3.7 percent -- compared to the same period last year, the biggest drop ever for the historically busy summer driving month.
Demand for oil in the U.S. -- the world's thirstiest consumer -- also continues to fall, dropping by 891,000 barrels per day in May compared the same month a year ago, the Energy Department's Energy Information Administration said Monday. "We're seeing both statistical and anecdotal evidence of a very rapidly weakening demand picture," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.
The declines accelerated after oil briefly dipped below $122, a key resistance level that triggered technical selling by computers programmed to dump oil contracts once prices fall under a certain threshold. "Once we break through $120, we could easily slide through to $100," said Darin Newsom, senior analyst at DTN in Omaha.
Also weighing on prices was a sharply stronger dollar compared to the euro, which made commodities less attractive to investors who have bought oil futures as a hedge against inflation and weakness in the U.S. currency. Monday's attack in Nigeria targeted two pipelines believed to be owned by a unit of Royal Dutch Shell PLC (RDSB) and was the latest in a two-year campaign of attacks on the country's oil industry. Shell said a pipeline had been damaged in attacks and that some crude production had been shut down to prevent the oil from spilling into the environment.
The oil company said Tuesday it may not be able to fulfill some oil-export contracts because of the damage. Shell didn't specify how much oil production was cut by the attack or how long repairs would take. Article RatingReader CommentsSubmit a CommentCommenting RulesWe encourage your feedback and dialog. All comments are subject to deletion by our Web staff.
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