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Gas prices could go down even further; Libya may export oil within a year or more

It could be a year or more before Libya produces enough oil to start exporting it in large amounts again. But once the oil starts flowing, it should bring the price of gasoline down even further.

International oil prices fell Monday because of the prospect that those shipments will hit the market again.

The shipments stopped six months ago as the rebellion in Libya raged. The conflict damaged pipelines and fields and forced out foreign oil engineers who once helped the nation export 1.5 million barrels of oil every day.

Before the country can begin producing oil in large amounts again, security must be re-established, a new government must be formed, the United Nations must lift international sanctions, and damage to oil fields and pipelines must be repaired.

The prices of crude oil and gasoline were already falling sharply because of concerns that the slowing global economy will slow demand from drivers and businesses.

Gas has fallen 41 cents, to $3.57 a gallon, from its peak this year of $3.98 on May 5. It could fall as low as $3.25 by the middle of September, experts say.

In the Buffalo Niagara region, a gallon of regular averaged $3.79 Monday.

The ouster of Libyan leader Moammar Gadhafi would clear the way for a new government and a return to oil production. But bringing Libyan oil production back to levels that will make a difference will take months if not years, experts say.

"This isn't going to lead to an overnight restart of Libyan oil exports," says Jim Burkhard, managing director for global oil at IHS CERA, an industry research group.

In the meantime, Burkhard says, the world's teetering economy will drive prices.

Monday, Brent crude fell 26 cents to $108.36 per barrel. It fell much further earlier in the day but rose as it became clear that it would take months for Libya to have an impact. The price of U.S. benchmark oil, known as West Texas Intermediate, rose $2.01 to $84.42. Traders who play the international oil markets, anticipating that the price of Brent crude would keep falling, wanted more U.S. oil.

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