In a recent interview with CNBC, Gulf Oil CEO Jon Petrowski predicts that oil prices will fall all the way back to $50 per barrel, but that gasoline prices are likely to remain on the high side. Petrowski believes that the expansion of supply will lead to falling prices and put pressure on refiners like Tesoro (NYSE:TSO) and Valero (NYSE:VLO). Given the costs of transporting refined product, the net effect on the economy is likely to be muted, although energy prices should stay contained due to natural gas supply.
In the video below, Fool.com contributor Doug Ehrman discusses the effects of falling oil prices without a corresponding drop in gas prices, and the waterfall of ramifications that would follow.
Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool has the following options: long January 01 2014 $20 calls on Chesapeake Energy, long January 01 2014 $30 calls on Chesapeake Energy, and short January 01 2014 $15 puts on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.