Utah gas prices fall — but are still high

Despite falling crude oil prices, Utah's gasoline prices are still the seventh highest in the nation, according to AAA Utah.

On Monday, the average price for a gallon of regular, self-serve gasoline in Utah was $2.60, a drop of 35 cents from a month ago and 23 cents lower than a year ago, AAA Utah reported. On Tuesday, Utah's average price had dropped another penny, to $2.59.

Only six states — Alaska, California, Hawaii, Nevada, Oregon and Washington — have higher average gasoline prices than Utah. The average national price is $2.26, down from $2.64 a month ago.

Rolayne Fairclough, a spokeswoman for AAA Utah, said oil supplies appear strong and prices should continue to move lower. But don't bet on it, said John Armbrust, president of Armbrust Aviation Group, a Florida-based consulting group.

At an aviation conference in Deer Valley this week, Armbrust said oil prices are down only on a temporary basis.

On Tuesday, light sweet crude for November delivery on the New York Mercantile Exchange fell $1.44 to $58.52 a barrel — the lowest close since Feb. 16.

"The hedge fund managers are really driving the price of oil," Armbrust said. "Over the last year they have dominated the market by 80 percent of the actual trades that are taking place on the New York Mercantile Exchange."

Armbrust said that at the same time oil prices were headed to $80 a barrel earlier this year, inventories of crude were growing.

"Why was that happening?" Armbrust asked. "Because the investment hedge funds insisted that's where the price should be."

Armbrust said brokerage houses like Morgan Stanley, Goldman Sachs and Co. and Lehman Brothers Holdings have a greater control over oil prices than big oil companies or even OPEC.

"They don't care what the price is as long as the market moves," said Armbrust, who added that geopolitical unrest and fewer U.S. refineries support traders in their efforts to sustain a volatile market.

Still, doubts are mounting that OPEC is on the verge of slashing its output by almost 4 percent, according to an Associated Press story on Tuesday. Saudi Arabia, the cartel's largest producer, is not supporting a 1 million barrel a day cut, the AP article said, and that inaction could drop oil to $50 a barrel.