Gasoline Prices Fall for Eighth Straight Week
Retail gasoline prices across the country tumbled for the eighth consecutive week, a government survey showed Monday, as ample supplies continued to ease worries about world oil production.
Nationwide, the average pump price for self-serve regular fell to $2.31 a gallon Monday, down 6.8 cents in the previous seven days, according to the Energy Department’s weekly price survey. California’s retail average dropped 7.7 cents to $2.683 a gallon.
Since early August, the retail average has plummeted 72.8 cents a gallon nationwide and 63.6 cents in California. Industry experts expect the trend to continue.
“I think we’re going to see prices decline through this week, and maybe even next week,” said Charles Langley, gasoline analyst at the Utility Consumers’ Action Network in San Diego. “It’s the result of lower oil prices and, more importantly, lower profit margins on the refining end.”
Oil prices, which account for about half the cost of gasoline, dived after hitting a peak closing price above $77 a barrel in mid-July. The price of the U.S. light sweet crude futures contract, which has been below $64 a barrel for three weeks, fell $1.88 on Monday to $61.03.
With U.S. oil inventories well above average, traders Monday shrugged off threats by Nigeria and Venezuela to prop up prices by cutting oil production. The producer that matters is Saudi Arabia, said John Kingston, global director of oil at Platts, an industry publication.
“The fundamentals really haven’t changed” for oil, Kingston said, but the outlook has. In addition to swollen oil inventories, the U.S. hurricane season has been uneventful, international tensions have stabilized and there is talk of an El Nino producing a mild winter, he said.
Members of the Organization of the Petroleum Exporting Countries have taken note, but Kingston expects Saudi Arabia and other large players to refrain from adjusting production until January. At that point, he said, “they have some tough choices to make.”
Oil prices, however, aren’t the only factor driving down costs at the pump. Analysts say the recent price break stems in part from refiners trimming their profit margins after months of unusually high earnings.
“Gasoline has fallen a lot further than crude,” Kingston said. “And refining margins are way, way down.”
Gasoline tracker Langley believes that the profit reduction at the refineries amounts to an election-season anomaly.
“It’s as simple as the oil companies not wanting this to be an election issue this November,” he said.
Joseph Sparano, president of the Western States Petroleum Assn., dismissed the notion that politics was playing a role.
“What we see in crude oil and gasoline is that, regardless of whether there’s an election, the prices tend to move in sync,” he said. “We have the same forces working together on the way down, just as they worked together in the spring to push the prices up. Despite all the rhetoric, that’s how the market really works.”
elizabeth.douglass@latimes.com
