BP economist: Gas prices could fall further at pump

2012-06-26T11:15:00Z 2012-10-24T12:42:07Z BP economist: Gas prices could fall further at pumpBy Keith Benman keith.benman@nwi.com, (219) 933-3326 nwitimes.com

HAMMOND | If the price of oil is any guide, consumers could be in for even more price relief at the gasoline pump as summer goes on.

Gas prices at the pump in the U.S. have fallen about 50 cents per gallon since April but could fall about the same amount again to catch up with dropping oil prices, Mark Finley BP general manager for global energy markets, told an attentive audience Tuesday in Hammond.

"It looks like there may be further decreases in store at the pump," Finley said at the annual Breakfast with BP hosted by the Lakeshore Chamber of Commerce at Dynasty Banquets.

The likely fall in gasoline prices is contingent on no major disruptions in supply occurring, such as any action by Iran to close the Straits of Hormuz, Finley said.

Finley's take on gasoline prices was welcome news just down the street Tuesday at the Speedway gas station at the corner of Calumet Avenue and Chicago Street.

"It's money in my pocket because I spend like $100 a week on gas," said Alexandria Groce as she filled up her late model Toyota with regular gasoline at $3.36 per gallon. Just two weeks ago it was $3.79.

If she is able to save more money on gasoline she would most likely spend it on food, clothes or "fun things," Groce said.

Crude oil trading on the New York Mercantile Exchange has fallen from near $110 per barrel in February to below $80 per barrel recently. The average price of a gallon of regular gasoline nationally currently is $3.40 as compared to $3.64 one month ago, according to the AAA Fuel Gauge Report.

Gasoline price drops have been even more dramatic locally, with a gallon of regular selling for an average price of $3.41 this week as compared to $3.83 one month ago.

At his presentation of the BP Statistical Review of World Energy, Finley made the case that smart U.S. government policy and a more competitive world oil market were responsible for averting energy shortages in 2011, even though there were two supply disruptions of historic proportions.

Those were the Fukushima nuclear disaster in Japan and the Libyan revolution, which cut off oil supplies from one of the worlds' largest producers.

"Price changes are the way the world economy dealt with those disruptions," Finley said. "Literally they kept the lights on."

In longer term trends, there is a dramatic change in the mix of energy the world consumes, with oil losing market share for the past 12 years, Finley said.

In the U.S., demand for oil has fallen for five years out of the past six, as motorists shift to more fuel-efficient vehicles.

"When you go to buy your new car, maybe that Hummer doesn't sound so good anymore and you go for the Prius," Finley said.

At same time, U.S. oil production is at highest point in 15 years and this nation's oil prices are significantly lower than world prices, Finley said.

That price difference is even more marked when it comes to natural gas prices, which have fallen dramatically in the U.S. as new drilling technologies bring more and more out of the ground. That has happened at a time when natural gas prices have been rising steeply in Asia.

"The U.S. is a great example of a flexible energy system," Finley said.

Copyright 2014 nwitimes.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Follow The Times

Featured Businesses

In This Issue

Professionals on the Move Banner
Get weekly ads via e-mail



Who do you support for the U.S. House of Representatives in District 1?

View Results