Oil: How low can it go?

With oil prices heading toward $100, that should be good news for consumers. But some think there won’t be true relief until crude hits $80 again.

NEW YORK (CNNMoney.com) — Gustav has come and gone. And fortunately, New Orleans has been spared the type of damage after Hurricanes Katrina and Rita three years ago.

That’s also good news for those living outside of the Gulf region. Fears that crude prices would spike dramatically higher due to massive disruptions of oil production proved for naught. Oil prices fell Tuesday, hitting their lowest point in nearly 5 months.


“The fact that oil has come down is a sign that perhaps the worst is over. Predictions that oil would go to $200 a barrel now seem more like a fleeting possibility,” said Kenneth Kim, economist with Stone & McCarthy Research Associates in Princeton, N.J..

Still, even though crude prices have slipped more than 25% since hitting a record high in mid-July and the average price of a gallon of gasoline has fallen more than 10%, it’s not yet a huge cause of celebration.

After all, at about $108 a barrel, the price of oil is around 50% higher than it was a year ago. Gasoline is higher by a third at $3.68 a gallon.

Bloomberg