Oil prices decline but remain relatively high

Oil and gasoline prices were down slightly on Tuesday and appeared to be stabilising, albeit at a relatively high level, as it became clear ...

Oil and gasoline prices were down slightly on Tuesday and appeared to be stabilising, albeit at a relatively high level, as it became clear that some refineries may be out of service for weeks or months even as other parts of the energy supply system resumed operations.

The price for a gallon of gasoline for October delivery was down 8.37 cents, to $2.10 a gallon, at midday after climbing past $2.60 last week on the New York Mercantile Exchange. Crude oil prices fell $1.67, to $65.90 a barrel.

At the retail level, analysts said, consumers can expect to keep paying around $3 a gallon to $3.20 a gallon for regular unleaded gasoline for at least the next few weeks. Nationwide, retail prices averaged $3.041 early today morning, down from $3.057 on Monday, according to AAA.

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“We will be looking at sustainable high gasoline prices for the near term for at least two or three weeks,” said Marshall Steeves, an analyst at Refco Inc. “Unfortunately, typically you see the easing through September on the retail level, I really don’t think we will see much of that this year.”

Typically, prices tend to tail of after the Labor Day holiday as students return to school and the summer driving season comes to an end. That reduced seasonal demand should help ease supply constraints throughout the energy supply system, Steeves said. It could take energy companies several months to restart four refineries in Louisiana and Mississippi that account for about 4 per cent of the US capacity, analysts and officials say.

As many as six others are in various stages of restarting operations, a process that can take several days to finish.

With the prospect of high prices persisting for the immediate future, federal and state policy makers have begun talking publicly about alleviating the pain on consumers by temporary relaxing state and federal gasoline taxes.

— NYT

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