There were conflicting reports on elements affecting the price of gas in Friday’s news. Just as an ample supply is driving down the price of oil, along comes Sandy, the “Frankenstorm,” to cause rumors of a possible hike in gas prices.
Falling price of of late
According to Daily Finance, the price of oil dropped 80 cents a barrel — to $85.25 — on the New York Mercantile Exchange for October 26. That is the lowest it has traded for since July 10, when it closed at $84.02 per barrel. The price of oil has fallen over seven percent in the last week.
Ample supply prompts drop
Experts are attributing the drop, at least in part, to a plentiful supply of oil. Ric Spooner, chief market analyst at CMC Markets in Sydney, said:
“I think that’s all about a scenario of more than adequate supply for the current demand level.”
According to the U.S. Department of Energy, oil supplies grew last week by 1.6 percent, or nearly six million barrels. The U.S. oil inventory is just under 375 million barrels, which is 11.1 percent more than it was last year at this time.
Prices may rise post-‘Frankenstorm’
Meanwhile, other reports are speculating that fuel price may rise at the pumps, at least in the short term, following Hurricane Sandy, which is also being called the “Frankenstorm.”
According to the research firm Seeking Alpha, the storm could cause the closure of all East Coast refineries, putting a temporary halt on the production of fuel. CBS news says that 6.5 percent of the gas consumed by Americans comes from those East Coast oil refineries.
Should that happen, the price of gasoline at the pump — which is currently an average of $3.60 a gallon, and has been easing its way down — could spike sharply. AAA says that pump prices have dropped every day since October 8.
Hurricane Isaac caused one-day spike
In August, Hurricane Isaac caused the temporary closer of some Gulf Coast refineries. Those closures prompted the largest one-day spike in gas prices in a year and a half.
Sandy could wreak billion-dollar havoc
Hurricane Sandy has already killed 21 people in Jamaica. Because it has become a merger of several storm fronts into one monstrous storm, it has come to be know as the “Frankenstorm.” It is due to hit the East Coast next week. According to CBS, it could cause as much as $1 billion in damages and leave millions without power.