Gas prices fall to an average $3.63; oil drops $10 on demand concerns
NEW YORK -- The average retail price for gasoline continued to fall in the latest week, the federal Energy Information Administration said Monday.
The EIA said the national average price for regular, self-service gasoline dipped to $3.63 in the week ended Monday, Sept. 29, from $3.72 the previous week, as more oil refineries and fuel pipelines recovered in the aftermath of Hurricane Ike.
The average price of gasoline remained 84 cents higher than a year ago.
On the New York Mercantile Exchange Monday, oil prices plunged more than $10 a barrel a U.S. financial bailout plan failed to win legislative approval, increasing fears tat a prolonged economic downturn that could sharply curtail energy demand.
Light, sweet crude for November delivery sank $10.52 to settle at $96.36, after earlier dropping as low as $95.04. It was crude's lowest trading level since prices edged back below $100 earlier this month; crude previously hadn't traded that low since February.
Crude has fallen almost $25, or 20%, in the past week amid intense bi-partisan talks to work out the $700 billion bank rescue plan.
Monday's drop came as House lawmakers defeated the emergency measure that would have absorbed billions of dollars in banks' bad mortgage-related debt and other risky assets in an effort to steady the teetering U.S. economy.
Oil market traders were already doubtful that the plan would be able to unfreeze credit markets and restore calm to the financial system. Global credit remain extremely tight, crippling companies' ability to raise capital and cover basic costs like payroll. If the economy weakens further, consumers and businesses around the globe would likely cut back on energy use even more, analysts say.
"That obviously has potentially negative implications for oil demand growth," said Michael Wittner, global head of oil research at Societe Generale in London.
The average price of gasoline fell in every region of the country, including California where fuel costs are usually the highest, according to the EIA report.
Gasoline was most expensive in the lower Atlantic region at $3.78, down 4 cents. Chicago had the highest big-city price at $3.91.
New England had the lowest regional price at $3.53 a gallon, down 7.1 cents. Boston had the lowest pump price at $3.47, down 7.1 cents.
The EIA also reported gasoline prices were down 14 cents at $3.91 in Chicago, down 5.6 cents at $3.63 in Los Angeles, down 4.6 cents at $3.65 in Seattle, down 5.8 cents at $3.56 in Denver, down 6.7 cents at $3.81 in Miami, down 9.6 cents at $3.53 in New York City, down 8.5 cents at $3.52 in Houston and down 21.9 cents at $3.61 in Cleveland.
Separately, the average price for diesel fuel rose by 0.1 cent to $3.96 gallon, up 91 cents from a year ago, the EIA said.
The New England states had the most expensive diesel at $4.08 a gallon, down 3.3 cents. The Gulf Coast had the cheapest diesel at $3.93 a gallon, down 0.5 cent.
Prices could come down more as U.S. Gulf Coast energy output ramps up following the passage of Hurricanes Ike and Gustav. About 57% of crude oil production and 53% of natural gas output remained shut-in after shutdowns prompted by the storms, according to the U.S. Minerals Management Service.
Contributing: Associated Press, Reuters