Eye on the Pump - Gas Prices

Crude Drops For 2nd Day, Prices May Follow

Oil Crude Futures Down $10 In The Last Two Days

MIAMI (CBS4) ― Finally a little welcome economic news from the world market, oil prices have settled sharply lower for the second straight day.

Light, sweet crude for August delivery fell $4.14 to $134.60 a barrel on the New York Mercantile Exchange after it was reported that U.S. supplies are much higher than expected. This follows a $6.44 sell-off on Tuesday, meaning prices have dropped over $10 since Monday.

Now many are wondering when we'll see some relief at the pump.

CBS4 reporter Al Sunshine said it's 'Economics 101' – when supplies are up and demand drops then prices go down. The weak dollar, along with tensions in the Middle East and other oil producing regions since the beginning of the year, made speculation on oil look like a sure thing. But as those who invested in the real estate market found out, what goes up can also go down.

If crude oil prices continue to fall, Antonio Villamil with the Washington Economics Group says we should see the price at the pump drop by 40-cents a gallon or more.

"I would say more realistically when we begin to see gas prices anywhere in the, let's say, $3.25 to $3.75 range," said Villamil.

As for how long it would take for the price at the pump to start dropping – it all depends on a number of factors.

Oil analysts say consumers can expect a lag of several weeks because gas prices are based on the local market; what competing stations are charging and how much gas is coming into Port Everglades. The price of a barrel of crude is only one part of the equation.

Nationwide, gas prices are averaging $4.15 for a gallon for regular unleaded. Prices at the pump have hovered at that level for the last several weeks and the hope by many is that the summer price spike has finally come to an end.

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