Advertisement

Holiday treat: Gas prices fall

Share
Times Staff Writer

As travelers revved up for Fourth of July road trips, pump prices continued to drop, a federal report showed Monday -- at a time of year when they are usually on the rise. California gasoline prices even dipped below the year-earlier cost for the first time in 2007.

But the price relief may have run its course, analysts said, citing continued refinery problems, strong demand and a longer-than-normal Fourth of July holiday that stretches through Wednesday this year.

“Gas prices will be going up like the fireworks,” said Phil Flynn, vice president and senior market analyst for Alaron Trading Co. in Chicago, adding that prices nationwide could rise 5 cents to 10 cents over the next month. “But one of the biggest concerns is over the possibility of a terrorist incident driving up the price of crude oil,” he said.

Advertisement

Flynn referred to the thwarting of car bomb plots in Britain over the weekend. Authorities have made at least eight arrests since two cars loaded with gas canisters and nails were found in London, and two men crashed a vehicle into a terminal at Glasgow airport and set the car afire.

Crude oil futures for August delivery rose 41 cents to $71.09 a barrel in New York commodities trading Monday, its highest finish of the year. That was an example, one expert said, of the fact that oil prices, and subsequently gasoline, can rise even when terrorist plots fail.

“Buyers get nervous about having enough oil to meet future demands and they start bidding the price up,” said Bruce Bullock, executive director of the Maguire Energy Institute at Southern Methodist University in Dallas. “Crude is still primarily a transportation fuel, and the incidents this weekend have upped the risk premium.”

For now, however, gasoline prices are still declining from highs hit in May.

The average cost of a gallon of self-serve regular gasoline in California fell 3.5 cents to $3.157, according to the Energy Department’s weekly survey of gas stations. Monday’s average was 3.2 cents below the price recorded at this time last year.

Nationwide, the average price fell 2.3 cents to $2.959 -- 2.5 cents ahead of the same week in 2006.

Gasoline prices have been falling because of improved refinery production and increased imports. But last Wednesday, the Energy Department reported that U.S. gasoline stocks stood at 202.6 million barrels, or 9.8 million barrels below 2006 levels. The shutdown of a Kansas refinery because of flooding only exacerbated the problem, experts said.

Advertisement

“It’s just a small refinery that wouldn’t normally rate much attention, but it’s in a critical spot in the Midwest, and it adds to the problems we’ve already had,” said John Kilduff, vice president of risk management at Man Financial Inc. in New York.

One analyst found reason for optimism, noting that the Atlantic hurricane season hadn’t produced a serious storm and adding that the Kansas refinery problem would have rallied gasoline prices immediately if it had occurred earlier in the year.

“Refinery problems are already built into this pricing structure, said Tom Kloza, chief oil analyst for Oil Price Information Service in New Jersey. “I think July prices will remain fairly flat to about $2.95 a gallon nationally and perhaps $3 to $3.15 a gallon in California.”

ron.white@latimes.com

Advertisement