Prices of gasoline, crude oil fall due to economic slump

As US gasoline demand fell 6.4 percent last week, owing to the global economic slump, the average price of regular gasoline at filling stations fell to $2.78 a gallon.

According to oil analyst Trilby Lundberg’s survey, gasoline use for the year is down 3.2 percent from a year earlier. And the average price for regular gasoline has not been this low since October 5, 2007, when it was $2.75 a gallon.

In fact, gasoline dropped 53 cents, or 16 percent, in the two weeks ending October 24. Crude oil, which accounts for about 73 percent of gasoline’s pump price, fell 56 percent from $147.27 a barrel in July.

The country’s biggest motoring club, AAA, said that regular gasoline at the pump costs $2.699 a gallon on average, down 34 percent from the record $4.114 reached July 17, and 4.9 percent lower than what it was last year.

Lundberg said: “There’s never been a price crash like this.” Prices have dropped 88 cents over the past 30 days “thanks to lower crude oil prices and shrinking US gasoline demand.”

Attributed the price reductions to crude prices and demand, Lundberg stated: “It is those same two factors that will decide what gasoline prices do from here.” She said that though the prices probably will keep falling, it will be at a lesser pace.

The survey indicated that the price of crude oil is the more dominant determinant. Oil Cartel OPEC, the Organization of Petroleum Exporting Countries, said Friday it would cut production by 1.5 million barrels per day starting in November.