Oil, gas prices fall with stocks

ByABC News
October 6, 2008, 10:46 PM

— -- The prices of gasoline and oil, racing each other up to records recently, now seem in a contest to see which can drop fastest.

The U.S. average price for regular-grade gasoline was $3.484 a gallon, the U.S. Energy Information Administration's weekly survey showed Monday 14.8 cents less than a week ago and the lowest since April 14, though 71.4 cents higher than a year ago.

Prices were down in all regions, EIA said. The lowest average was $3.393 in the Midwest, which also had the biggest drop from last week: 21.6 cents. Priciest in EIA's survey was the West Coast: $3.568 after a drop of 7.4 cents the past week.

Diesel averaged $3.875, EIA said, down 8.4 cents in a week, but 84 cents higher than last year.

The U.S. average price for gasoline peaked at a record $4.114 July 7, EIA data show. Diesel hit a record average $4.764 July 14.

On a day the Dow Jones average fell 800 points before rebounding to finish down 370, oil plunged, too, hit by pessimism about future demand. The November futures contract closed Nymex trading at $87.81 a barrel, down $6.07 from Friday's close and the lowest settlement price since Feb. 6.

"The market is finally acknowledging that this credit crisis is a global phenomenon, and that will equate to lower world oil demand in the future," Phil Flynn, analyst at Alaron Trading in Chicago, told the Associated Press. "People thought the crisis would be contained to the U.S., and we'd see oil demand in China and India continue to grow. Now that just doesn't seem possible."

Gasoline prices will continue to plunge, say fuel-price trackers.

"We'll see a $3.20 national average in the next couple of weeks," says Paul Taylor, economist at the National Automobile Dealers Association.

He says that would be good for auto dealers, who have a shortage of fuel-efficient, small vehicles to sell but still are well-stocked with bigger vehicles.

"The common price in the next 30 days is going to be around $3," says Tom Kloza, senior analyst at Wall, N.J.-based consultant Oil Price Information Service. Already, he says, "I can go less than 5 miles from where I'm sitting at my desk and buy it for $2.99."