Oil, diesel prices continue to drop

| 10/2/2001

Oil prices slumped again on Monday after OPEC exporters decided against further supply curbs as the global economy weakens. The cost of diesel dropped more than 8 cents per gallon from a week ago.

Fears of falling oil demand due to a slowing global economy and reluctance by the Organization of the Petroleum Exporting Countries to reduce supply have weighed heavily on markets since mid-September.

OPEC oil ministers decided against more export cuts at a meeting in Vienna last week, and some members such as Kuwait and Iran indicated they were happy with prices below the cartel's $25 per barrel target. OPEC's reference oil price stood at $20.99 per barrel on Friday, versus its $22-28 per barrel target range, below which it has an informal deal to cut production.

Saudi Arabian Oil Minister Ali al-Naimi said last week that he did not want to rush into further production cuts when OPEC's one-million barrel per day reduction from Sept. 1 has only just begun to make itself felt.

The cartel found itself with little room for maneuver as prices plunged, boxed in by political sensitivities after the Sept. 11 attacks and deteriorating world economic conditions.

The weekly retail on-highway diesel prices released by the Energy Department Monday show the national average cost of diesel fell .083 cents per gallon from last week to $1.390.

The biggest price drop was in the state of California. Diesel there plummeted .106 cents per gallon from a week ago to $1.510. Despite the decline, fuel in the state remains highest in the nation.

Fuel in the Midwest also plunged more than 10 cents per gallon. Diesel has dropped more than 18 cents in the region over the past two weeks to $1.41.

The lowest prices in the nation are found in the Lower Atlantic region. Fuel there fell 6 cents to $1.31 per gallon.

The remaining regions' price per gallon is as follows: East Coast, $1.36; New England, $1.46; Central Atlantic, $1.44; Gulf Coast, $1.43; Rocky Mountain, $1.50; and West Coast, $1.46, respectively.