In the biggest decline
since 1991, crude oil prices fell 12 percent from last week on expectations
that the terrorist attacks will trigger a global recession, reducing demand
for such products as diesel and gasoline. The average cost of diesel in the
U.S. dropped more than 5 cents per gallon from a week ago.
Crude oil prices are
down 16 percent since the attacks, which led some economists to forecast a
slowdown in global economy, similar to 1991, when allied forces attacked Iraqi
armies in Kuwait during the Persian Gulf War.
One analyst, Trilby Lundberg
(Lundberg Survey), said consequences of the attacks on the economy and lower
gas consumption during fall and winter could keep prices falling. ''But prospects
for the continued falling pump prices would crumble immediately if crude oil
supply, especially from the Middle East, were to appear threatened,'' she
Adam Sieminski, a global
oil analyst at Deutsche Banc Alex Brown in Baltimore, told Bloomberg. "Going
into the fourth quarter, we're looking for demand to fall by one million barrels
a day. We have the same supply picture as before, but the demand picture is
getting worse by the day."
The Organization of Petroleum
Exporting Countries meets this week in Vienna and industry experts are saying
OPEC will likely decide to leave production quotas unchanged. An output cut
now would weaken demand and could cause market shares to go to non-OPEC producers,
The weekly retail on-highway
diesel prices released by the Energy Department Monday (Sept. 24) show the
national average cost of diesel fell about 5.5 cents per gallon from last
The biggest price drop
was in the Midwest region. Diesel their plummeted about 8 cents per gallon
from a week ago to $1.515. The lowest prices are found in the Lower Atlantic
region. Fuel there dropped 4 cents to $1.37 per gallon. The highest prices
nationally are once again found in California. Fuel in the state plunged about
7 cents per gallon to $1.616. The remaining regions' price per gallon is as
follows: East Coast, $1.41; New England, $1.49; Central Atlantic, $1.50; Gulf
Coast, $1.40; Rocky Mountain, $1.55; and West Coast, $1.55, respectively.
Weakened demand for jet
fuel is visible with other fuels declining as well.