Price Of Oil Keeps Falling And Falling

The cost of crude briefly dipped below $30 a barrel Tuesday, its lowest level in more than 12 years, before climbing back above that threshold before the close of trading.

Oil, which had sold for roughly $100 a barrel for nearly four years before beginning to fall in the summer of 2014, is down 17 percent this year alone and is now probing depths not seen since 2003.

"All you can do is forecast direction, and the direction of price is still down," said Larry Goldstein of the Energy Policy Research Foundation, who predicted a decline in oil in 2014.

The price of crude is down because global supplies are high at a time when demand for it is not growing very fast. The price decline, already more dramatic and long-lasting than most expected, deepened in recent days because economic turmoil in China is expected to cut demand for oil even further.

Lower crude prices are leading to lower prices for gasoline, diesel, jet fuel and heating oil, giving drivers, shippers, and many businesses a big break on fuel costs. The national average retail price of gasoline is $1.96 a gallon.

That trend is expected to continue. The U.S. Energy Information Administration forecasts that the average retail price for gas to hover around $2 a gallon for most of 2016. The agency also predicts that U.S. households will see the lowest heating oil and natural gas bills this winter in more than a decade.

On Tuesday the Energy Department lowered its expectations for crude oil and most fuels for this year and next. The department now expects U.S. crude to average $38.54 a barrel in 2016.

But layoffs across the oil industry are mounting, and bankruptcies among oil companies are expected to soar. BP announced layoffs of 4,000 workers on Tuesday. Fadel Gheit, an analyst at Oppenheimer & Co, said as many as half of the independent drilling companies working in U.S. shale fields could go bankrupt before oil prices stabilize.

The Associated Press contributed to this report.