Oil prices are back up over $120. But that's a sharp decline from July's all-time high over $145. Many drivers watching plummeting oil prices the last few weeks are asking: Why aren't gas prices falling as much?
Here's the answer: It often takes 3-4 weeks to see the move in oil prices impact prices at the pump. It's true that while we have seen oil prices fall over $25 since July 11th, we haven't seen the same kind of dramatic move in gas prices ....yet.
The national average for unleaded gasoline hit a high of $4.11 a gallon back on July 17. Today pump prices are down to $3.85 on average--that's a 6% drop compared to a 17% plunge in oil prices.
Oil hit a fresh three-month low yesterday. The last time oil prices were at $118 in early May, retail gasoline prices were around $3.60 a gallon. Some states, including Oklahoma and Missouri, are there already. While the national average for gas prices may get there eventually, refiners and retail gas station owners have made purchases at much higher prices so they may not be able to bring down their price right away.
But in some regions, gas prices could get down to $3.50 fairly soon. (Barring any major geopolitical or weather event, of course.) Drivers may notice some big variations, though. Even within the same neighborhood, you may see a 20 cent difference in prices depending on what that retailer paid back when wholesale gasoline prices were higher.
So what's the best case scenario - by fall how low can we expect prices to go?
It's always difficult to predict especially since we are in the middle of hurricane season. But by November and December when demand traditionally drops off, the experts I talk to say we can probably expect to see gasoline in the low $3 range.
Questions? Comments? firstname.lastname@example.org
In a season of roller-coaster energy costs, the drop in oil and natural gas prices in recent days was greeted as good news. But they remain so high that experts are predicting that heating bills this winter will far exceed those of last year.
U.S. drivers found more relief at the pump as the national price for gasoline dropped to its lowest level in 11 weeks, the government said on Monday.
Total, the world's fourth-largest Western oil group, reported a 20 percent rise in second-quarter adjusted net profit, buoyed by record oil prices and the start of production at new oil and gas fields.
The Paris-based major earned 3.723 billion euros ($5.82 billion) in net profit -- adjusted to strip out gains from changes in the value of fuel inventories and one-off items -- against 3.1 billion euros in the second quarter of 2007.
This was slightly above the 3.646 billion euro average forecast of a Reuters poll of 11 analysts.
Total again bucked a trend of flat or falling oil and gas production among rivals like Royal Dutch Shell and BP.
The start-up of its Jura gas and condensate field in the UK North Sea, and of the 90,000 barrel a day Moho Bilondo offshore oil field in the Republic of Congo helped lift Total's output by 1 percent to 2.353 million barrels of oil equivalent per day.
Operating income rose 35 percent to 7.786 billion euros on sales up 23 percent to 48.2 billion euros.
When expressed in dollars, Total's net income was up 39 percent, and operating income rose 41 percent on sales that came 43 percent higher.
A 76 percent year-on-year rise in the price of crude in the second quarter, to an average of $120 a barrel, underpinned the upstream business of France's biggest listed company with a market capitalization of just about $180 billion.
The group made no comment on its outlook.
It had previously said its oil and gas production would rise on average by closer to 3 percent between 2006 and 2010, rather than 4 percent earlier envisaged.
You got to admire the American ‘Can-Do’ spirit, which is on full throttle display since we woke up to our energy predicament.
Oil sheiks got over us a barrel? Not for long! Definitely not when we really put our collective Yank minds to the problem – as we are finally beginning to do. Part of that means remembering who we are - a continental power with vast resources – and tapping into our natural endowments.
By now, everyone knows we were naturally christened as the ‘Saudi Arabia of coal’ – with hundreds of years of supply.
And most of us caught Boone Pickens (see video) recently making his pitch for turning the American Great Plains into a vast wind farm, making good on our God-given wind resources to become the ‘Saudi Arabia of wind.’
Exxon Mobil broke its own record for the highest-ever quarterly profit by a U.S. company again Thursday, but earnings still disappointed investors due to weaker-than-expected production.
Furious motorists faced with high pump prices have accused oil majors of profiteering, but as the firms announced bumper profits this week, they said they were making little gasoline sales.
Marathon Oilmay split its its oil and gas production business and its refining and marketing operations into separate entities, the company said on Thursday, sending its shares sharply higher.
Marathon , the sixth-largest U.S. oil refiner, said it was likely to decide during the fourth quarter whether to undertake the move. If it proceeds, the split would probably occur in the first quarter of 2009, it said.
Analysts, who have long said the company's refinery business is a drag on its exploration and production operations, welcomed the potential split.
"I think it makes sense," said Phil Weiss, an analyst with Argus Research. "Marathon is still treated like a refiner in my view, and they really have a growing E&P business that has great prospects.Maybe this is what is needed to get investors to recognize that growth."
Marathon shares jumped nearly 8 percent $48.70 in premarket trading.
Marathon also reported lower second-quarter earnings on Thursday. Net income fell to $774 million, or $1.08 a share, from $1.55 billion, or $2.25 a share, a year earlier.
Excluding a $220 million after-tax mark-to-market loss in the value of its trading positions and other one-time items, Marathon earned $1.20 per share. On that basis, the earnings fell well short of analysts' average forecast of $1.50, according to Reuters Estimates.
Companies that refine oil to produce gasoline and other products have struggled to pass through record crude prices to their customers.
In the second quarter, the price of oil in the United States averaged just under $125 a barrel, nearly double what it cost a year earlier. But gasoline prices were up only about 25 percent.
Houston-based Marathon was separated out of USX in 2002, two decades after it was purchased by U.S. Steel.
North Sea Brent and U.S. crude futures have shown signs of reversing their traditional roles as an unusual premium for the European benchmark has spread across the pricing curve.