Bad news on the stock market today should translate into lower prices at the pump.
Last week we predicted that gas prices would stay about the same or decline. They nudged lower since last Thursday by three-tenths of a penny (just as we predicted). We are now predicting that prices will drop another 1.5 to 3.5¢ by Monday and probably continue dropping through next Friday.
There are two reasons behind the down-trend: The first is that it has been a "Debbie Downer" week on Wall Street, and futures prices for the entire petroleum complex have fallen rapidly. West Texas Intermediary (WTI) oil, which was testing $100 a barrel last week, has collapsed by $14 a barrel to close at $86 today. On a per gallon basis that will translate into a price cut of about ten cents per gallon for gasoline. Meanwhile, NYMEX gasoline fell 29¢ a gallon since Monday, while natural gas fizzled from $4.19 on Monday to $3.95 today.
That's the national picture. The second reason for falling prices is local - according to the Oil Price Information Service, gasoline inventories have increased on the West Coast, rising another 600,000 barrels to 30.6 million barrels in inventory. As a result, the price of CARBOB - the basic blendstock for California's special gasoline - fell from $2.95 on Monday, to $2.89 as of yesterday. What all this means is that by Monday, at least a few dealers should be getting deep discounts on the gasoline. Hopefully, a few of them will pass the savings on to you.