Oil Price Drops Below $100 a Barrel: Gas Continues to Go Up

VIDEO: The drop in oil prices could spell relief for drivers at the gas pump.
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Gas prices continue to rise -- even while the oil used to make it drops in price, say analysts.

The national average price for gas this week is $3.96, according to the Department of Energy.

Hawaii still has the nation's most expensive gasoline as of today, but the nation's heartland is catching up. In Illinois, the average price is $4.32 a gallon, according to AAA's Daily Fuel Gauge Report. That's even higher than the average in California, $4.27, which is known for its high pump prices.

Indiana is catching up with an average of $4.24 for regular gas.

At least drivers in those states are facing cheaper prices than those in Alaska. At one gas station in that state, gas was selling for $6.79 a gallon.

To top those prices, just head to the car rental counter. You may face $9.29 a gallon if you don't prepay for gas or fill up the tank yourself. With an 11-gallon tank in one car, for example, car renters could pay about $100. For larger vehicles, it could cost over $280.

Gas Up While Oil Down

The price of oil, on the other hand, is dropping. For the first time since March 16, the price of a barrel of oil settled today below $100. The massive sell-off was sparked by lower consumer demand for gasoline, an improvement in the value of the U.S. dollar and concerns about slowing global growth.

The New York Mercantile Exchange reported that oil futures settled at $99.80, down $9.44 or 8.6 percent for the day. That is the biggest one-day move down in percentage terms since April 20, 2009 (-8.84 percent) and the biggest in nominal dollar terms since September 29, 2008 (-$10.52).

On Friday the Labor Department releases its April jobs report and economists are expecting about 185,000 new jobs created. But if the report disappoints analysts, then the big oil selloff will almost certainly continue in a big way.

The latest government measure of demand for gasoline in the U.S. shows that overall, drivers have cut back gas purchases by almost 2 percent in the past four weeks compared to a year ago. That kind of significant downward move in demand, coupled with rising stockpiles of oil in the U.S., mean prices of crude should be headed downward.

Phil Flynn, energy analyst for PFGBest, said he believes we've seen the market top for oil -- at least until the middle of the summer driving season.

"Our long national nightmare might be over," said Flynn.

But don't get too excited yet. Prices at the pump likely won't come down as quickly as the futures prices for oil.

Economists say that historically, gas retailers will let their margins expand a bit before passing those savings onto consumers.

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