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Fueling Change : Balking motorists are driving gasoline prices down, bucking trends earlier this year.

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Times Staff Writer

Motorists have voted with their gas pedals against higher pump prices this summer by driving less and opting for cheaper, lower grades of gasoline, a reversal of trends earlier this year.

As a result, inventories of gasoline grew unexpectedly in mid-July as refiners continued to produce gasoline at the highest rates in 11 years, and analysts now foresee prices continuing to slip by a penny or two a gallon as they have since June.

The flat demand erases any lingering fears that refineries would fail to keep up with demand or that motorists would see the return of gas lines.

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“You had gasoline prices move up strongly prior to the driving season, and some people may have decided not to take that long drive,” said M. Craig Schwerdt, an industry analyst with Seidler Amdec Securities in Los Angeles.

In the first six months of the year, gasoline consumption averaged 7.26 million barrels a day, about 2,000 barrels less than levels in the like period a year ago, according to figures from the American Petroleum Institute, the oil industry’s main trade group.

From April to June, higher prices may have cut usage by as much as 100,000 barrels per day, reported the authoritative Petroleum Intelligence Weekly newsletter.

In addition, drivers are buying lower-octane gasoline, “and that’s one way of responding to price,” said Tom Burns, manager of the economics staff at Chevron USA.

The national weighted average price of all grades of gasoline fell to 115.66 cents per gallon in the period ended July 21, from 116.76 cents per gallon on July 7, according to the Lundberg Survey of 12,000 gasoline stations. That compares to a peak of 118.43 cents on May 19, the survey showed.

In Los Angeles, the retail price of regular unleaded gasoline at self-service pumps--the most popular grade--fell to 106.80 cents per gallon on July 21 from 109.64 cents per gallon on July 7, the Lundberg Survey showed. That compares to a peak price of 114.24 cents per gallon on May 5.

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With continuing high production rates--more then 90% overall--the trends may have contributed to the increase in total inventories of gasoline in the week ending July 14. Stocks were up 5.2 million barrels, to 222.8 million barrels, API reported.

The one-week spurt in stocks doesn’t necessarily augur excessive inventories in the coming weeks. But production has run at unusually high rates, in part to offset an expected loss of capacity under new federal vapor regulations. In addition, slackened demand for high-octane products meant that refiners could produce more gas overall.

The Energy Department reported that average daily production of gasoline peaked at 7.6 million barrels per day during the week ended June 30, which was the highest level since December, 1978. The average rate of production also peaked that week at 91.4%, the highest rate since August, 1978, the department reported.

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