$30 Crude Oil Looming? - Could Result In $1.75 Per Gallon Gasoline

Editor's Note: The last time crude was about 30 buck a barrel gasoline was about 1.75 per gallon... so why not?.

​NEW YORK August 20, 2015 – NACSonline reported that oil prices fell to a six-year low Wednesday, hitting $41.35 a barrel on the New York Mercantile Exchange. This drop subsequently increased chatter among analysts and traders that crude oil dropping into the $30 a barrel range is coming—and soon.

“Given where we are now, there is a 90% likelihood that we will dip into the $30s,” Chris Main, oil strategist at Citigroup Inc., told the Wall Street Journal.

Carsten Fritsch, senior commodity analyst at Commerzbank AG, said upcoming seasonal maintenance and concern about Chinese growth could easily push crude (WTI) into the $30 range in the coming months, writes the newspaper. Andrew Lipow, president of Lipow Oil Associates, suggested that crude (WTI) could hit $32–$34 a barrel in the next six months.

Crude oil prices have by far the biggest effect on retail fuel prices. Given there are 42 gallons in a barrel, a rough calculation is that retail prices ultimately move approximately 2.4 cents per gallon for every $1 change in the price of a barrel of crude oil. While this is not an exact calculation, it helps demonstrate that as crude prices change, so does the price of gasoline.