What to expect from gas prices in the short term

A man pumps gas into his vehicle at a gas station in Miami, Fla. Gas prices may be a bit of bright spot in a dark and stormy world economy.

Kai Ryssdal: There are few things that get American consumers more agitated than what they have to pay to drive around. For that reason I'm pleased to report that crude oil prices are off $20 or so from the beginning of the year -- a welcome relief for consumers and our wallets. Our wallets and purses are the inspiration behind Money Matters -- our regular series on consumer finance -- where today Marketplace's Scott Tong tells us what we might expect in our short-term driving future.
Scott Tong: Remember the silly straw? You sucked on the big curvy thing, and it took a little for the purple Kool-Aid to arrive? Same with gas prices. When crude oil prices fall, it takes a week or two to inch its way to the pump. Here's Avery Ash of AAA.
Avery Ash: The cheaper crude is purchased by refiners, it's refined into gasoline, it's sold in the wholesale gasoline markets and then eventually makes its way to consumers.
He thinks gas prices will keep falling. By how much? The rule of thumb says for each dollar crude falls, gas comes down two-and-a-half cents. So last month's $20 drop in crude means about 50 cents a gallon less. We're not there yet. And it could go down further still if you listen to Phil Flynn at Price Futures Group. He says we're swimming in oil supply.
Phil Flynn: We have the most oil in the United States we've had since the 1990s. Europe's supplies are overwhelming. You've got OPEC producing the most oil they have in over 30 years.
And this may sound weird, but Flynn doesn't think the world has enough buyers to prop up oil prices -- not in Europe, not in Asia, not here. So that's a kind of bright spot in a dark and stormy world economy. Some more sunshine: cheap gas lightens other bills. Andrew Weissman's an energy lawyer at Haynes and Boone. He says cheaper oil-based fertilizer makes for cheaper food. Plus...
Andrew Weissman: Transportation costs are a particularly significant factor in the tomatoes you buy at the grocery store, or almost any other food good.
He says lower-cost produce takes about a month to get to market. In Washington, I'm Scott Tong for Marketplace.
VIDEO EXTRA: Bike-to-work commuter and energy analyst Jamie Webster explains why high gas prices changed his commute.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.

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