Pump Prices Fall to Lowest Since 2011 Amid Oil SlumpDan Murtaugh and Lynn Doan
Regular gasoline in the U.S. fell to the lowest level in more than three-and-a-half years as shale oil production and weak global demand spurred a four-month slump in oil prices.
The average retail price fell 0.9 cents a gallon to $3.177, Heathrow, Florida-based motoring group AAA said on its website today. That’s the lowest level since February 2011, when the uprising started against Muammar Qaddafi that disrupted oil supplies from OPEC member Libya.
Gasoline prices have fallen more than 50 cents this year since peaking at $3.696 in April. U.S. drivers are reaping the benefit of strong global crude production and weak demand causing oil prices to drop more than a quarter since June.
“That’s like somebody putting dollars right in your pocket,” said David Hackett, president of Stillwater Associates, an energy consulting firm in Irvine, California. “That sounds like Christmas presents, going out to dinner, being able to do something.”
Brent crude, the global benchmark, traded at $84.80 a barrel on the ICE Futures Europe exchange at 1:06 p.m. New York time today, the lowest level since November 2010. U.S. benchmark West Texas Intermediate dropped to as low as $80.01 a barrel today on the New York Mercantile Exchange.
Global oil consumption will increase by about 650,000 barrels a day this year, the Paris-based International Energy Agency said in a monthly report yesterday. That’s a reduction of 250,000 from its prior estimate. The International Monetary Fund said on Oct. 7 that the global economy will expand by 3.8 percent in 2015, down from a July projection of 4 percent.
“The price of gasoline in America is tied to the global price of oil,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “It’s a global picture, and the rest of the world is falling apart.”
U.S. oil output increased to 8.88 million barrels a day the week of Oct. 3, the most since March 1986. U.S. production has increased 65 percent in the past five years as companies have used horizontal drilling and hydraulic fracturing to tap into hydrocarbon-rich layers of underground shale rock.
The Organization of Petroleum Exporting Countries increased oil production by 402,000 barrels a day in September to 30.47 million, the group said in its monthly oil market report. It was the biggest monthly gain since November 2011 and the largest production in more than a year.