The price of crude oil plummeted 6% between Monday and Friday. For the time being, that has eased Americans’ fears of paying $5 per gallon at the pumps. The per barrel price of crude fell below the $100 price for the first time since early February and closed at just under $98.50. The per barrel price on Monday was $104.87.
The price of oil for the most part dictates the price of gasoline and gasoline often mimics the rise and fall of crude prices, although the chances of gasoline prices can sometimes be delayed for a week to ten days following the change in crude prices.
In the U.S., $3.94 per gallon was the peak for the national average of gasoline in early April. Since then, prices have been steadily dropping for both crude and gasoline and on Friday, the price for a gallon of gasoline was down to $3.80 on average in the country. Oil peaked at a barrel rate of $109 in late February, before starting to fall off.
One reason for the decline in prices is the demand for crude has fallen. There has been less demand out of Asia and because the normal run up in prices for the summer season came early, it made demand peter out. In addition, there have not been problems of late with Iran, who threatened to close the Strait of Hormuz over the sanctions the U.S. and European Union placed against the country.
New refineries in Europe have also come online and that has helped to reduce pressure and lower prices.
