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Thursday, Mar 28, 2024
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Gas Prices Crawl Down

Those tumbling gas prices in recent weeks are the result of increased supplies due to oil companies stockpiling larger volumes, anticipating another major hurricane season, plus the decrease in purchases caused by the end of the driving season, said John Hofmeister, president of Shell Oil Co., who was in San Diego on Sept. 13 as part of a 50-city tour.

Hofmeister said the declining prices might be a sign of a declining economy.

“When we see supplies build up we always worry whether that’s the leading indicator of some type of economic softening, but we don’t think it is at this point because it’s also the end of the driving season across the nation,” he said.

Hofmeister couldn’t say whether gas price declines would continue or what the estimated price would be by year-end.

Prices are contingent upon three main components: economic growth or contraction; natural disruptions such as hurricanes; and finally, geo-political tensions, which have the greatest impact on oil prices.

“We never predict the future of oil prices,” he said. “We learned the hard way not to try.”

Royal Dutch Shell PLC, the Netherlands-based parent of Shell Oil, reported net income of $12.8 billion for the first half of 2006. Houston-based Shell Oil contributed 23 percent to the earnings, according to the company.

, Mike Allen

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