How Gadhafi's Fall Can Help Your Commute
Ready to shave a little off your gas costs?
The price could drop 20 cents to 25 cents a gallon if supplies of fuel from Europe are restored. Oil supply in Europe, which supplies about 50% of the U.S.'s demand for straight gasoline, have been disrupted over the last seven months due to the unrest in Libya.
"Libyan oil production may begin to return in the next few months, and oil prices and refiners in Europe will have a lower raw material cost," said Andrew Lipow, who heads the petroleum industry consulting firm Lipow Oil Associates LLC.
As oil speculation becomes more encouraging, you may be shaving a quarter a gallon off your fill-up within a few months.
Libya produces a low-sulfur crude that refiners can easily manufacture into diesel -- especially popular in European countries like France, Germany, Italy and Spain. About half of the 40 million gallons of gasoline the U.S. imports daily comes from Europe.
Prior to the country's turmoil, Libya exported 1.3 million barrels of crude daily and accounted for 2% of the world's production of oil -- which has essentially been cut off. The drop in supply has boosted oil prices.
Though the Libyan coup d'etat bodes well for U.S. commuters, not everyone agrees that there will be an immediate effect on gas prices.
"The psychological impact of Gadhafi's fall on oil prices has been minimized," said Dan Dicker, an independent oil trader and author of Oil's Endless Bid. "Maybe it will fool enough people psychologically, but it's not for certain."
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