Deal May Mean Lower Gas Prices by Summer's End

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You might want to put off that SUV trip until the fall. Although an impending international agreement means cheaper gasoline appears to be on the way, it may be late summer before it arrives at the pumps. In the strongest hint yet that crude oil prices — currently at their highest levels since the Gulf War — will soon be on the way down, three of the world's top oil-producing nations reached a tentative agreement Thursday to increase production. The announcement by Venezuela, Mexico and Saudi Arabia appeared to be both a concession to the Clinton administration — U.S. energy secretary Bill Richardson spent the better part of the past month imploring oil-producing nations to increase production — and a concession to market pressures (who can resist selling oil when prices are so high?).

The move could force an OPEC vote to increase global oil supplies when it meets March 27. "You've got three big oil producers saying they'll increase production, so OPEC will obviously be paying attention," says TIME financial correspondent Adam Zagorin. "OPEC realizes that the market demands a supply increase, but they're interested in doing this in a coordinated way — of building a consensus, so that some countries don't drastically increase production and slash prices." OPEC is also said to be concerned about sparking a recesssion, which would be likely to cause an uncontrollable dip in oil prices.

It remains to be seen is how quickly relief will come to the pumps. U.S. oil stores are so depleted that any crude oil production increase could take months to translate into better news at your local service station. So even if the increases begin immediately after OPEC meets, industry analysts don't believe they will have an impact on the U.S. market in time for the summer driving season. The only hope for a earlier decreases: President Clinton's recent indication that he might increase the domestic oil supply by lending the U.S. strategic oil reserves to major gasoline distributors.