Gasoline Prices Continue Slide
Pump prices continued to fall in California and the rest of the nation, a government energy forecasting agency said Tuesday, as oil prices sank to their lowest level in nearly eight months amid doubts that OPEC was on the verge of slashing its output.
In California, the average cost of a gallon of self-serve regular gasoline dropped 8.2 cents during the last week to $2.601, while the U.S. average declined 4.9 cents to $2.261, according to the federal Energy Information Administration’s weekly survey of service stations. The California average was down 36.3 cents from a year earlier and the U.S. average was down 58.7 cents.
The weekly gasoline numbers were released a day late because of the Columbus Day holiday.
The drop in pump prices reflects the tumble in crude oil prices, which account for about half the cost of making gasoline.
In New York futures trading Tuesday, light sweet crude for November delivery fell $1.44 a barrel to settle at $58.52 -- the lowest close since Feb. 16. Crude peaked at a record $77.03 in July.
Oil fell after Saudi Arabia indicated it wouldn’t reduce oil shipments to some customers next month, countering a call for a production cut of 1 million barrels a day by some members of the Organization of the Petroleum Exporting Countries.
Saudi Arabia, the cartel’s biggest member, will honor commitments to refiners in some Asian countries and the Mediterranean countries, according to traders and refiners who asked not to be identified. Without the support of Saudi Arabia, the 4% output reduction is unlikely to be implemented, analysts said.
“This has been a complete disaster” for OPEC, said Michael Guido, director of commodity strategy at Societe Generale in New York.
Traders were watching the shutdown Tuesday of the nation’s largest oil field and the trans-Alaska oil pipeline.
Oil giant BP said high winds caused a power outage that shut down Prudhoe Bay in northern Alaska. Production fell to about 20,000 barrels Tuesday from about 350,000 barrels Monday.
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The Associated Press and Bloomberg News were used in compiling this report.
