Aug. 09--Amid the wreckage of Monday's collapsing financial markets, a bright spot for consumers shone: Crude oil dropped to its lowest price of the year, presaging lower gas prices.
The price of oil plummeted $5.57 on Monday, or about 6 percent, to $81.06 a barrel, on the New York Mercantile Exchange. Oil hadn't lost value so fast since August 2008, when crude was coming off an all-time-high price of $145 a barrel.
Analysts said they expected Monday's drop in oil prices to continue Tuesday. Gas prices could follow quickly, a local gas station owner said.
The fall in commodities prices came amid a general sell-off of stocks and other commodities.
"People sell anything risky in times like this," said Ryan Davies, a principal at Titan Commodities in San Diego. "Current demand and supply (of oil) have no bearing on what's happening right now."
Oil prices had been rising through much of the year as turmoil in the Middle East and North Africa spurred traders to bid up prices. The price peaked on the NYMEX trading floor on May 2 at $113 a barrel.
A week later, gas prices peaked at $4.26 for a gallon of unleaded in San Diego and $4.24 in San Bernardino and Riverside counties, according to the Automobile Club of Southern California.
The closing price of oil on Monday represented a 28 percent drop, with further to go, according to some analysts.
"Now it's (the market) testing the $70s," said Charles Langley, an analyst for the Utility Consumers' Action Network in San Diego.
Mohsen Arabshahi, who owns a pair of filling stations in Oceanside, said he expected to lower prices after he got his next delivery on Tuesday.
"It takes effect right away, within a day or two," Arabshahi said. "It may not come down as much as the crude came down, but it will come down."
On Monday, the average price of a gallon of unleaded was $3.77 in San Bernardino and Riverside counties, and $3.79 in San Diego County, the auto club said.
Gas prices in the region should drop to around $3.50 a gallon within the next month, said Joe Hahn, a former oil engineer and economist at Pepperdine University.
Locals said they hoped the predictions of falling gas prices came true.
"We have a motor home that stays parked a lot," said Gary Albright of Escondido. "We're thinking about a trip to Utah, maybe in September -- if prices drop a little bit."
Langley said lower gas prices could be good for everyone's wallet, if not for their portfolios.
"It's not good news for your retirement or pension fund if it's invested in the market," he said. "If you're an ordinary consumer and you've been hit with high gasoline bills for a long time, this is very good news. This is something you will feel."
Call staff writer Eric Wolff at 760-303-1927 or follow him on Twitter at NCTEnergy.
