Gasoline Prices in West Taking Dip for Holidays

When Southern California residents drive off to visit relatives this Thanksgiving, they will see a welcome sight on the highway: lower gasoline prices.

Thanks to an abundance of crude oil and refined gasoline, refiners have been forced to reduce their prices and that reduction has begun to show up at the gas pump. And, maybe with a few exceptions, analysts expect prices to remain relatively stable during the upcoming holidays.

“Gasoline in Southern California has been a bargain,” says Ron Appel at United Oil Co., which owns numerous gasoline stations. “You’re seeing regular gasoline selling in the 70s.”

In the two weeks ending Nov. 18, the average price of a gallon of gasoline dropped 20 cents to 100.06 cents, said Trilby Lundberg, who surveys 13,000 gasoline stations nationwide.

Unusual Pattern

Lundberg said customers pumping gas at self-serve stations paid 90.62 cents for regular unleaded, 106.04 cents for premium unleaded and 86.77 cents for regular leaded. At full-service stations, regular unleaded was 119.22 cents a gallon, premium unleaded 130.16 cents and regular leaded 116.27 cents.

The retail decline in prices “has been happening over the past couple of weeks,” said energy industry analyst Craig Schwerdt at Morgan, Olmstead Kennedy & Gardner.

The drop, energy experts say, is long overdue given a decline in the price of crude oil since last spring and the end of the high-consumption summer season. Normally, gasoline prices start to decline after Labor Day. “But we didn’t see that in September of this year,” Schwerdt said. “We’re finally seeing price relief at the pump.”

Industry officials maintained that gasoline inventories had been tight on the West Coast for months as a result of unexpectedly heavy demand while production problems reduced output. The result were prices that refused to fall despite declines in the price of crude oil. Before prices began to fall, the relatively high prices in Southern California might have attracted additional shipments of gasoline from other domestic and foreign sources, analysts say.

“The high prices attract refined products from other areas,” said Steve Shelton, executive director of the Southern California Service Station Assn. “People bring in tankers from the Gulf Coast.”

Industry experts say the additional flow of gasoline into the area, however, has swelled inventories. That in turn has forced wholesale prices below levels in other parts of the country. Schwerdt said that some suppliers are now shipping gasoline out of California and across country where they can obtain higher prices.

Most industry experts see prices remaining pretty stable during the holidays, despite increased consumption. The price of crude oil and competition usually have a much greater impact on the price of gasoline than does consumption.