Lower gasoline prices may be in store for Long Island drivers due to recent international events including the rejection by Greek voters Sunday of austerity measures, analysts say.
Concerns about international economic fallout if the economy of Greece collapses helped fuel a sell-off this week of oil futures, with the benchmark U.S. grade falling $4.40 on Monday, 20 cents on Tuesday and another 68 cents Wednesday, to $51.65 a barrel on the New York Mercantile Exchange, the lowest level since April 10.
Also feeding the crude oil sell-off were indications that world leaders are close to a deal with Iran on limits to its nuclear program, which could lead to the end of internationally imposed limits on purchases of crude from Iran.
"If that deal should occur, the market is going to expect some more Iranian oil, especially that which has been sitting in tankers, hitting the market soon," said Andy Lipow, president of Houston consulting company Lipow Oil Associates LLC. Iran would be OPEC's second largest producer if its output weren't restricted.
Further, the euro has slid versus the dollar. Because oil is priced in the U.S. currency, a weaker euro makes it more expensive in most of Europe, and reduces investor demand for oil and other dollar-priced commodities. And a worldwide oversupply of crude continues.
Lipow thinks crude prices could fall further in coming days to about $50 a barrel, leading, he said, to a potential decline of 5 to 7 cents in gasoline pump prices in coming weeks.
Any decline will be tempered by strong demand from American drivers reveling in gas prices this summer that are about a dollar lower than a year ago, he said. "The American consumer has taken to the road and demand is near its all-time record," he said, running about 9.5 million to 9.7 million barrels a day. A barrel is 42 U.S. gallons.
At least one other analyst, though, thinks that strong demand actually could lead to higher gasoline prices. Carl Larry, the Houston-based director of oil and gas for the global consulting company Frost & Sullivan, said he also thinks OPEC might cut production in response to $50 oil. "It's very possible we'll see action from OPEC soon to get prices back up to $60," he said.
Crude oil accounts for 51 percent of the price of gasoline, according to the American Petroleum Institute.
Gasoline prices have been stable on Long Island in recent weeks, with regular averaging $3.012 a gallon Wednesday morning, the motorist group AAA said. The average last summer peaked on July 2 at $4.036 a gallon, then fell to the winter's low of $2.348 on Feb. 2.U.S. crude fell last year from a high of $107.95 a barrel on June 20 to a recent low of $43.39 a barrel on March 17.
While U.S. crude oil production is expected to decline in the months ahead, total output in 2015 is on track to be the highest in 45 years, the U.S. Department of Energy said Tuesday. The expected production decline is from a reduction in drilling new wells, a response to lower crude prices.
The record high Long Island average in the AAA survey was $4.34 a gallonset in July 2008.