Prices At Gas Pumps To Decrease, Heating Costs To Increase

The cost of gasoline for motorists will slowly decrease and stabilize in the coming year, showing less volatility, so that we’ll no longer have to wonder how much the price will change from morning to evening, says a University of Alabama petroleum engineering authority.

The average price of a “fill up” dropped during the last few weeks of 2000, and this trend will continue. “The price of oil will drift down through most of the next year, probably reaching $20 to $25 a barrel, which will translate to gas prices of about $1.15 to $1.20 per gallon for consumers,” predicts Dr. Peter Clark, associate professor of chemical engineering at UA.

However, the price of natural gas, which is used for heating, will likely continue to increase in the first part of the year, “probably going higher than it has in a long, long time,” projects Clark. “There are predictions for a harsher winter in the early months of 2001, and if this happens, the demand for natural gas will be higher, and the price per million Btu could reach more than $8.50-the highest it has been since the late 1970s and early 1980s.” Then, in the summer, natural gas prices will take their seasonal drop.

Gasoline prices are affected by a variety of factors, from labor costs to refinery fires, but the biggest influences are supply and demand. According to oil industry analysts, much of the past year’s increase in prices could be attributed to the decision of the Organization of Petroleum Exporting Countries (OPEC) to raise the cost of crude oil by limiting production.

One of the reasons the United States is at the mercy of OPEC is because more than half of the oil we use is imported from other countries. “We used to be a major producer of oil and gas, but we exhausted much of our reserves–they don’t last forever,” Clark explains. Another problem is that an increasing amount of the refined product this country uses is processed outside of the United States. Because of environmental constraints, there hasn’t been a new refinery built in this country in the past 20 years, says Clark.