Typically, strife in the Middle East means the prices of oil and gasoline soar.
But even as the United States launched airstrikes against terrorists in Syria — with the help of some of the Arab states such as Bahrain, Saudi Arabia and the United Arab Emirates — the price at the pump continued to plummet, then to do no worse than rise a fraction of a cent.
The price of oil is down about $15 a barrel since mid-summer and near its low for the year.
The national average price for gasoline dropped for 16 consecutive days to $3.34 per gallon on Monday, the lowest in seven months, according to AAA Oil Information Services. Since then, the price ticked up 0.4 of a cent.
Analysts give a number of reasons: Lower crude oil prices because of the shale drilling boom in Texas, North Dakota and elsewhere; the seasonal switch to a cheaper winter blend at refineries; and seasonally falling demand.
“The world is drowning in oil,” said Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University. “We have ample global supply right now largely because of the huge increase in production in North America.”
GasBuddy.com is predicting U.S. drivers can expect to see the cheapest gasoline for this time of year since 2010, when prices hit an average of $2.60 a gallon. On Wednesday, they were reporting a national average of $3.346.
The Lincoln average for regular gas at GasBuddy.com was $3.305, down 24 cents from a year ago. Nebraska’s drop of 23 cents over the last year was the seventh biggest drop among the states, according to AAA.
The lowest prices now are in South Carolina and Alabama, closing in on $3.
“We’re not going back to $1.50 a gallon and free glasses, but we are looking at prices this autumn that are the lowest since autumn 2010,” said Tom Kloza, chief oil analyst for GasBuddy.com. “We’re going to have lower lows and less altitude on the peaks.”
Exactly how we got here goes back a few years.
Gasoline prices are determined to a great degree by the world price of crude oil. While the member nations of OPEC, many of them in the Mideast, still matter, analysts say the rising influence of U.S. energy production is creating a new paradigm in calculating the price of gasoline.
For example, after the Arab Spring and Libya’s dictator fell in 2011, Libya was producing 1.2 million barrels of crude a day and the U.S., 5.6 million barrels. The United States is now pumping out 8.8 million each day, Kloza, said, the equivalent of three Libyas since Muammar Gaddafi’s ouster, mostly from booming oil fields like the Eagle Ford Shale and Permian Basin in Texas, the Bakken in North Dakota and the Rockies, he said.
“There is no continent with cheaper oil than the U.S.”
Domestic oil production is up 60 percent over the last three years, which is having so much impact on the world oil market that OPEC recently cut its production by 400,000 barrels a day to try and stabilize the price, Weinstein said.
“With a dustup in the Middle East, you used to see a spike,” said the Dallas economist, who also listed production in the Canadian oil sands as a factor. “OPEC has kind of become irrelevant.”
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