Gasoline Lines, Price Hikes Take a Summer Vacation

Dire forecasts of summer gasoline lines and higher prices aren’t materializing, and analysts say prices at the pump may be headed even lower as the vacation season draws to a close.

Although consumers are paying about 15 cents a gallon more this summer than last, nearly all the increases came in the two months after the Exxon Valdez oil spill last March. Since June, retail prices in most areas have slipped slightly.

The consumer group Buyers Up, a division of the Ralph Nader-founded Public Citizen organization, issued a report on June 13 saying tight supplies and rising demand would lead to higher prices and possibly 1970s-style gas lines by early August.

Christopher Dyson, author of the report, said then that he expected prices to jump about 10 cents a gallon during the summer, mainly because of a supply squeeze.

In fact there have been no reported shortages of gasoline, even in remote areas with heavy tourist traffic, according to Joseph Koach, executive director of the Service Stations Dealers of America. He noted that many industry groups, as well as the Bush Administration, had disputed Buyers Up’s prediction.

“They’ve got to have egg on their faces,” Koach said.

Still Precarious

Dyson, in an interview last week, acknowledged that his report was off the mark, but he said the nation still faces a precarious supply situation and that a refinery or pipeline accident could throw the retail gasoline market into crisis.

Some other analysts in June agreed with Dyson’s view that a supply crunch was possible, but none went so far as to predict motorists would face backups at the gas pump.

Dyson said he had “totally underestimated” the refining industry’s ability to sustain an exceptionally high rate of production throughout the season.

“That was the major reason our prediction didn’t come out as it should have,” Dyson said. He also did not expect the high rates of summer oil production by major foreign producers that pushed down prices for crude used to make gasoline.

U.S. refineries have run nearly full blast this summer, using an average 89.8% of available capacity in June and 90.3% in July. The July figure was the highest for any month in 11 years, according to the American Petroleum Institute.

Little Added Use

The risk of shortages also was eased by a lack of growth in gasoline use. The Energy Department said demand in the first half of this year was unchanged from a year earlier, although it says growth will resume soon. Last spring it had predicted about a 1% increase for this year’s first half.

Summer usually is the peak period for gasoline consumption, and demand normally tails off by September.

Jan Lundberg, a private energy forecaster based in Fredericksburg, Va., said the recent slump in gasoline prices “is clearly due to an unexpectedly weak summer driving season” that he said could mean that the economy is entering a recession.

Lundberg and other analysts say prices will probably continue dropping this fall, although the pace and depth of decline will be determined in part by the willingness of wholesalers and station dealers to pass on savings from lower crude prices.