by Victor Lopez
PERMIAN BASIN--It wasn't so long ago that gas prices were at an all time high, close to $4 a gallon. Now consumers are saving 50-60 cents, even more in towns like Andrews. According to one local expert, this all has to do with the law of supply and demand.
The CEO of Henry Resources, Jim Henry said, "Finally inventories are increasing and everyone is seeing that. And that has caused the oil prices to go down. It's not that there's not enough consumption, it's that there's too much supply. We've got too much oil on the market."
After hitting record levels of $147 per barrel in July, the price of crude oil has finally come down out of the stratosphere. According to Henry, there's still a little ways to go before everything levels out, "Supply and demand are equal at about $70 a barrel and that's where we should be. Everything else is speculation."
The price of oil going down creates a domino effect, meaning gas prices go down too. The national average for a gallon of regular unleaded is $3.44. Parts of West Texas are already paying less than that now. And it could go down even more.
"We think the oil price is going to continue to go down. It's in the 90's right now, we think it'll be in the 70's, maybe even get down to 65. That converts to what, less than 3 dollars per gallon for regular gasoline," Henry explained.
He adds the Permian Basin has little to worry about with the economic crunch that's taken hold of the Nation. That means a repeat of the oil bust of 1980's is almost impossible, even if oil prices were to fall to below $65 a barrel.
"I think the oil industry is in good shape. I think we may see a slight slow down, but other than that, we're in Midland/Odessa. We're lucky to be in the oil industry. We'll be kind of sheltered from the financial storm that's going on outside."
Henry says we can expect to see prices continue to drop through the end of this year. If that's the case, everyone could see gas prices dip below $3 a gallon, as early as 2009.