June 8, 2006
After the announcement of Al-Zarqawi's death, the price of crude oil dropped over a dollar a barrel. But will we see any difference at the pump?
The barrel price of crude oil dipped below $70 for the first time in weeks today after President Bush announced to the world that Al-Zarqawi was dead. With the average price of gas in the U.S. at $2.90 a gallon, it really remains to be seen if this will make a dent.
U.S. drivers have seen gas prices rising and rising. On this day last year, a gallon of gas cost in the U.S. at $2.11, today, $2.90. According to Economics Professor Lee Coppock, the flourishing nuclear talks with Iran and now Al-Zarqawi's death might just help.
"I think investors [and] people in the marketplace are saying now, 'Oh, maybe the world oil supply is less risky than it used to be.' If it looks like the supply is going to be stable in the future, than the price impasse will be greater than these two nations," he said.
The high risk in the market place has lead to spikes lost post-Katrina pricing. While Coppock says prices are going down as quickly as they rose, the consumer should see some relief.
"Immediately, maximum like a quarter a gallon. Not that that's insignificant but it's a small portion of how much prices have gone up in the past few years," he said.
Now according to Coppock, long term might be a different story. Iran and Iraq together only produce about 7 percent of the world's oil. However, the symbolism of a more stable market place may just drive the prices down further in the future.