The price of a barrel of oil continues to freefall, and Douglas is maintaining the lowest price for gasoline in the county.
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“Everything I see and hear would indicate we will soon be under $3 a gallon..” He later guessed, with the most recent drop, that the price for a gallon of gas might drop near $2.50 per gallon.
There have been steady decreases in the price per gallon for more than six weeks in Douglas, while the price per gallon is increasing in Mexico.
The cost of gas in Mexico has caused many motorists to abandon U.S. station to save money in Mexico.
The price is less because the gas prices are subsidized by the government, and the fuel is a different mixture than that of the U.S. stations.
Mexican gas is made with a different formula -- containing more sulfur -- which could hurt your car in the long run, according to Stephen Mazor with AAA's Automotive Research Center.
That fuel mixture can ruin the emission control equipment on American cars and cause them to fail emissions tests.
There are also questions about the accuracy of the pumps.
The Douglas Dispatch recently purchased fuel at an Agua Prieta station and a liter of gas actually cost about 10percent more than the posted price meaning that the pumps were not calibrated correctly.
Oil hasn’t been this cheap in 13 months — a rare silver lining for consumers amid a rapidly imploding financial landscape.
Crude prices have almost been cut in half since surging to a record near $150 barrel over the summer. Energy experts believe prices could go even lower.
Light, sweet crude for November delivery ended the day $8.89 lower at $77.70 a barrel on the New York Mercantile Exchange. It was the lowest settlement price for a front-month crude contract since Sept. 10, 2007. In London, November Brent crude lost $8.57 to settle at $74.09 a barrel on the ICE Futures exchange.
Investors have shrugged off an array of market-stabilizing efforts by world governments, including a $700 billion U.S. financial rescue plan, several bank bailouts and a coordinated interest rate cut by the Federal Reserve and central banks around the globe.
The IEA now expects global oil demand to total 86.5 million barrels per day this year and 87.2 million barrels per day next year.
“The fundamental game for oil has changed. In the last decade, oil went up because of strong global economic growth. That story for the near term is over, so everybody has to re-evaluate,” said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.
OPEC signaled it may tighten output to put a floor under falling prices, but it didn’t seem to matter.
The Organization of Petroleum Exporting Countries said Thursday it will hold a special meeting Nov. 18 to discuss how the economic crisis is affecting oil prices. The head of Libya’s national oil company, Shukri Ghanem, called on oil producing nations to cut output.
Many doubt that an OPEC cut would reverse the extreme downward momentum on oil. OPEC’s decision last month to cut production by 520,000 barrels a day did little to stop the losses.
Flynn said another output cut “may actually accelerate the slide.”
“What’s driving this market right now is fear of demand destruction and lack of credit,” he said. “If you can’t borrow money to buy crude, then demand falls more and so do prices.”
In other Nymex trading, heating oil futures lost 20.86 cents to settle at $2.21 a gallon, while gasoline futures fell 22.03 cents to settle at $1.807 a gallon. Natural gas futures fell 29 cents to settle at $6.535 per 1,000 cubic feet.
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