Oil prices extended their steep losses Tuesday, tumbling below $92 a barrel as a worsening economy suggested that U.S. energy demand will keep falling despite crude's return to year-ago levels.
But you'd be hard-pressed to find relief at the pump in Middle Tennessee, where prices rose to a record high of nearly $4.09 a gallon on Tuesday, up 4 cents from Monday and well above the national average of $3.85. Analysts said the lingering effects of refinery outages along the Gulf Coast took a toll on states that rely on pipelines bringing fuel from coastal regions where Hurricane Ike caused damage over the weekend.
AAA reported the average price of gas in the Nashville area stood just under $4.09 a gallon on Tuesday, up 50.5 cents in the past month.
Prices at the pump in East Tennessee were even higher. The Knoxville area reported an average price of $4.495 a gallon on Tuesday, although that was down about 16 cents from Monday when the after-effects of Ike first shocked the market.
There could be relief in sight, however. Crude oil futures on the New York Mercantile Exchange fell below $92 a barrel on Tuesday after averaging $116.69 in August.
Outages continueAnalysts said most U.S. consumers and businesses are bracing for a protracted economic downturn that will force Americans to cut back on driving and lead to manufacturers shipping and selling fewer products. That will curb demand for fuel, analysts said.
"The economic slowdown is completely unavoidable now and people will be driving less, trucking less and buying less," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com. "Energy consumption will fall dramatically."
The price of crude has fallen 38 percent since shooting above $147 a barrel on July 11.
But relief from high oil prices isn't universal. Gas prices at the pump topped $4 a gallon in parts of Alabama, Illinois and Kentucky in the wake of Ike. Refinery damage along the Gulf Coast was not as severe as some feared, but temporary outages continued Tuesday at some Texas refineries due to a lack of power.
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