Oil prices have fallen to just under $64 a barrel – the lowest
level in months – as concerns over the domestic supply seem to be
easing.

Hitting nearly $74 a barrel in early August, prices have dropped
almost daily since that time, with easing concerns over Iran and a
slower than expected hurricane season playing into the decline.

Meanwhile, gasoline prices have also dropped over most of the
country – in northwestern Pennsylvania the average cost stands at
$2.639 a gallon – as refineries change over to a winter blend of
gasoline at this time of year, according to the American Automobile
Association in Pittsburgh.

“Things are looking pretty good,” Steve Rhoads, executive
director of the Pennsylvania Oil and Gas Association, said
Wednesday. “The concern over Iran seems to have melted a little bit
and the BP oil problem in Alaska didn’t turn out as bad. The new
oil find in the Gulf was also a psychological boost.

“There are no real threats to the domestic supply, allowing the
price to settle down a little bit.”

However, just because oil prices have taken a dip recently,
Rhoads said prices are expected to rebound in the fourth quarter to
around $70 a barrel, in part, because OPEC has agreed not to change
its production levels.

“We are completely at the mercy of the global market,” Rhoads
said. “So far, we still seem to be at the upper level of the curve.
I don’t predict any substantial price decrease in the near
future.”

Officials said the market has been weak lately, falling nearly
18 percent since mid-July. Meanwhile, OPEC maintains about 2
million barrels a day in spare capacity, while the U.S. Department
of Energy has reported that crude inventories were at the highest
levels since 1998.

For his part, Bill O’Grady, a commodity analyst at A.G. Edwards
& Sons, told The Associated Press he sees the decline in oil as
part of a broader slump for commodities prices at a time when
central banks around the world are raising interest rates.

O’Grady said as it becomes more expensive to borrow money and
the economy cools off further, investors are likely to shift toward
more stable assets such as real estate.

“Prices could go as low as $50, but that’s not likely in the
near term,” Rhoads said.

Locally, the price for a barrel of Penn Grade Crude reached
record highs in August, when American Refining Group was paying
$73.75 a barrel, while Ergon Oil Purchasing was paying $72.50 a
barrel.

On Wednesday, ARG was paying $60.50 a barrel, while Ergon was
paying $61.50.

McKean County has been well-served with the recent high prices.
According to the state Department of Environmental Protection, the
number of wells drilled across the area reached record levels – a
hike of 32.4 percent between 2004-05.

In August alone, the county saw 24 new wells drilled;
neighboring Warren County had 17 and Forest County, 12. However,
those figures have slowed considerably in the first two weeks of
September – no wells have been drilled in the region thus far.

Only Elk County, according to DEP, received new well drilling
permits in August, with four oil permits applied for.

Meanwhile, on the gasoline side of the ledger, officials with
the U.S. Energy Department’s Energy Information Administration
expect prices across the country to drop by an average of $2.55 by
January, only to rise again in the spring.

According to AAA’s Fuel Gauge Report, the average price in
Bradford this week stands at $2.800 a gallon for unleaded,
self-serve gasoline – still nearly two cents higher than elsewhere
across northwestern Pennsylvania, which saw an average drop of 9.7
cents at the pump.

Officials with AAA said Wednesday the national average price for
gas has dropped 42 cents per gallon since prices reached their high
point for the year at $3.036 per gallon on Aug. 7.

The long-term outlook is much less certain, however, according
to AAA.