By STEVE EVERLYThe Kansas City Star More News
Oil prices finished down sharply Thursday, wiping out all of their gains for 2011 and setting the stage for lower pump prices for motorists.
A barrel of West Texas crude, the U.S. benchmark, was down more than 5 percent at the close of trading on the New York Mercantile Exchange. It finished at $86.63, down $5.30 per barrel.
Wholesale gasoline prices beat a retreat as well, closing down about 20 cents to about $2.70 per gallon. That doesn’t include fuel taxes, retailers’ profits and some transportation costs. The lower wholesale prices, unless they quickly rebound, should soon be reflected in retail prices.
According to AAA, a gallon of regular gasoline early Thursday cost $3.57 on the Missouri side of the Kansas City area and a few cents higher on the Kansas side.
The declines came with fears of another recession, which helped cause a rout on Wall Street. If the United States and other major countries slide into a second recession, that will probably cause demand for petroleum to drop at a time when more than enough oil is available. Economic slowdowns typically dampen demand for oil.
“If you want low oil prices, all you need is a recession,” said James Williams, an analyst with WTRG Economics.
Oil prices dropped to $31 per barrel at the end of 2008 as the financial crisis and recession unfolded. Analysts don’t expect a similar drop this time, but oil prices could decline further if more evidence of a recession emerges, especially on a global scale.
Oil prices have been propped up in part because demand in many other countries has been stronger than in the United States.
“If we keep getting bad news like this, then oil prices are likely to continue down,” Williams said.
Even natural gas prices, which were already lower than a year ago because of ample supplies in the United States, fell Thursday. The wholesale price for the fuel declined by 14 cents to $3.95 per 1,000 cubic feet. A year ago, the fuel was $4.74 per 1,000 cubic feet.
To reach Steve Everly, call 816-234-4455 or send email to .