It looks like consumers are finally starting to see lower prices at the pump, with auto club AAA reporting a modest decline in gas prices this week. The drop comes after crude oil prices have fallen 20% since July. What does this mean for the economy?
Light crude oil prices have been climbing in the last few days, closing the week at $88.94 per barrel on the NYMEX. If prices climb high enough, it could damage the still-weak economy by raising the costs of gasoline, jet fuel and petroleum-based chemicals. How high is too high?
Strikers in France shut down refineries that ship gasoline to U.S. East Coast, and the proportion of corn-based ethanol the government will allow in gasoline is rising from 10% to 15%.
The price per gallon for gasoline is at the second-lowest level in five years, and some economists predict it could drop much further soon. The reason: More-than-ample inventories of crude oil and refined petroleum products.
Gas prices reversed sharply over the past two weeks, falling more than 7 cents to an average of $2.70 a gallon for regular unleaded. A drop in oil prices helped reduce the pain at the pump, bringing gas prices to the lowest level since February.