Cover Story: Falling oil - falling gas?

CHARLOTTE, NC (WBTV) - Falling oil prices.  A bright spot in a tanking economy.

Our credit rating is downgraded. The stock market is going crazy. But soon, you'll likely be paying less for gas.

A last minute turn around on Wall Street Tuesday.  The market finished the day strong gaining back 429 of the points the Dow bled away on Monday.

We're back above 11,000.  Which is good news.

Right now, the national average for a gallon of gas is $3.65.  But some industry experts predict gas prices could drop by 30 cents a gallon in just the next two weeks.

And it's because oil prices are dropping.

Oil is going the way of the market, which is down.  That's good when you're talking about the price of gas.

They're speculating that the economy is going to stay weak and that means demand for oil will be less robust as well.

No one's going to be happier to see the price come down than David Little.

"Gas is definitely on my mind. Today I think it is with anyone's that's commuting," he said.

Little has commuted from Hickory to work in Charlotte for 16 years.

Most of that time petrol hasn't been a problem.  It has been the last three when gas went above four-bucks a gallon.  And this year when it almost went there again.

"Yeah, it's a tough pill to swallow.. when you're paying 40 to 50 dollars a week for gasoline to get to and from your work," said Little.

Now with the stock market tanking.  It's taking the oil markets with it.

Oil peaked this year at $113 a barrel at the end of April - beginning of May.

Since then it's down a third - a sharp decline of 10-percent in the last  week - settling at just above $79 a barrel Tuesday.  That's the lowest oil's been since September 2010.

It hasn't translated to the pump - yet.  Gas in Charlotte is still anywhere from $3.68 a gallon to $3.74.

It's down slightly in the last week but should fall farther and faster if oil prices don't jump back up.

It's eerie similar to what oil did when the stock market crashed three years ago.  Oil went from $100 a barrel to $30 a barrel almost overnight.  And gave us a great break on gas.

"I don't think it's going to be that extreme. I think there are factors that are going to put a floor on how fall it can fall."

UNC Charlotte economist Dr. Peter Schwarz says much of the market's been fueled by speculators.

It's estimated 70-percent of the contracts for future oil delivery are now bought by financial speculators - largely big investment banks and hedge funds - people who never plan to take control of the oil just flip the contract for a quick profit.

"They love oil," says Schwarz.  "They look to where (they can) make money on volatility a lot of times. And so if they're going to make money they have to go with something where the price fluctuates quite a bit."

And now they're dumping oil fearing the economy will stay weak and that there won't be a lot of demand for oil.

Falling oil is not only good news for drivers but for truckers - making goods cheaper to haul and for manufacturers - making goods cheaper to produce.

Says Charlotte commuter David Little, "That would be wonderful. I mean absolutely wonderful! I'm sure the first time I would gas up I would be in shock."

Take out the speculators and oil should be priced $60-or-70 a barrel.  It's now at $79/barrel.

Oil hasn't been this low since last September.

So what does that mean at the pump? And when?

We ought to be seeing a noticeable difference in the next week or so again if it doesn't shoot back up.

Oil at $79 a barrel roughly translates to gas priced at about $2.70 a gallon, which in fact it was a year ago.

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