CARS.COM — As crude oil trades near a 10-year low and the average price of gasoline falls by about a penny each day, history and conventional wisdom provide constant reminders that neither phenomenon can last. But the chief executive of one of the largest independent oil trading companies thinks chances are good that relatively low oil prices could stick around for years, and motorists will benefit from lower gas prices as a result.
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Ian Taylor, CEO of Vitol Group BV, told the Bloomberg news service in an interview that oil prices could range between $40 and $60 a barrel for as long as 10 years. Though that is much higher than the current price of less than $30 a barrel, it is less than half the historic high of $147 set in 2008. Oil was going for $107 a barrel as recently as June 2014, and few analysts predicted the price would fall as far as it has. Now, though, the world is awash in oil, demand is slowing and the global economy is becoming more efficient, so it needs less oil, Taylor said.
The Energy Information Administration echoed Taylor's view Wednesday by forecasting that regular gas will average $1.98 a gallon in 2016 and $2.21 next year. The EIA expects oil will average $38 a barrel this year and $50 in 2017.
The current slide in oil prices is paying dividends to U.S. motorists practically every time they fill up. The AAA Daily Fuel Gauge Report on Thursday said the national average for regular gas was down to $1.70 a gallon, 7 cents cheaper than a week ago and the lowest for February since 2004. AAA said the average for premium gas was $2.60 and for diesel it was $2.
Earlier in the week, GasBuddy estimated that just 13 percent of gas stations were selling regular for more than $2 a gallon and more than 25 percent were selling it for less than $1.50. Regular is 51 cents cheaper than a year ago, when prices were rising. Two years ago the average price for regular was more than $3.30 a gallon, and in 2013 it was more than $3.50. Diesel has seen a more dramatic drop from a year ago, with the current price 81 cents lower than in 2015.
Recent price drops at the pump have been driven in part by refiners purging their systems of winter gasoline blends ahead of seasonal maintenance and a switching to pricier summer blends. The increase in supply is driving prices down, especially in the middle of the country, where they're among the lowest in the country. Seven states averaged less than $1.50 a gallon for regular on Thursday. Oklahoma was the lowest at $1.36, followed by Indiana, Kansas, Michigan, Minnesota, Missouri and Ohio.
"In the days ahead, expect this seasonal 'clearance sale' of gasoline to continue, leading to lower prices in most areas," Patrick DeHaan, senior petroleum analyst for GasBuddy, said in a statement. "But don't get too relaxed; the shift (to summer gas) will lead to an eventual shift in prices once winter gasoline is gone."
Only six states average more than $2 a gallon for regular gas: Alaska, California, Hawaii (posting the highest prices in the country at $2.62), Nevada, New York and Washington.
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