Oil and gas prices fall as Saudi Arabia moves to increase output
Oil and pump prices fell as the world’s biggest petroleum exporter took steps Friday to boost its output.
Saudi Arabia may increase its oil production by as much as 13% in coming days, a Saudi newspaper reported Friday. The word came just two days after the Organization of the Petroleum Exporting Countries snubbed a Saudi call to raise production quotas to reduce prices and help boost the global economic recovery.
Analysts saw the production move as a bold step to reassert Saudi influence over OPEC.
The Saudis had urged their colleagues to make up for the loss of Libyan oil production as that country still staggers under a struggle to unseat the regime of longtime leader Moammar Kadafi. A faction led by Iran, Venezuela, Ecuador and Iraq succeeded in thwarting the Saudi goal, but analysts said that Saudi Arabia still had enough spare capacity to act on its own.
“We’re hearing that the Saudis might go to more than 10 million barrels a day, with an increase of about 1.5 million barrels all on their own. We could get more oil out of the OPEC non-agreement than we might have if they had agreed to do it as a group,” said Phil Flynn, an analyst with PFGBest Research in Chicago. “The Saudis are opening the taps and showing their displeasure with the rest of the cartel.”
Flynn said gasoline prices should continue to fall as a result.
Crude oil for July delivery fell $2.76 to $99.17 a barrel on the New York Mercantile Exchange; prices remain 31% higher than a year ago. Brent crude for July delivery fell $1.18 to $118.39 a barrel on the London-based ICE Futures Europe exchange.
Retail gasoline prices were already moving lower. The Automobile Club of Southern California’s Weekend Gas Watch said most local retail outlets were already below $4 a gallon.
“As prices are dropping, we are seeing some wider gaps between the cheapest and most expensive gas stations,” Auto Club spokesperson Jeffrey Spring said. “Drivers in the Coachella Valley area can find prices in the $3.60 to $3.70 range, and there are a few stations in the greater L.A. and San Diego regions that have prices under $3.80 a gallon.”
The average price of a gallon of regular gasoline in California fell to $3.958 on Friday, said AAA, which uses data from more than 100,000 retail outlets across the U.S. compiled by the Oil Price Information Service and Wright Express. A week earlier, the California average stood at $4.017 a gallon.
It came on an unusual day in which California was not on the list of the five most expensive states in the U.S. for gasoline, according to AAA. California ranked seventh on a list headed by Alaska ($4.240 a gallon), Illinois ($4.056), Hawaii ($4.030), Connecticut ($4.027) and New York ($3.969).
The five cheapest states for gasoline were South Carolina ($3.442 a gallon), Tennessee ($3.497), Mississippi ($3.503), Alabama ($3.517) and Arkansas ($3.541).
Nationally, the average price of a gallon of gasoline fell to $3.723 on Friday, down 1.1 cents from Thursday and 6.6 cents from a week earlier.
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