Gas Prices Dip as Demand Slows
Gasoline prices, which gushed after Iraq invaded Kuwait, actually dipped last week as demand tapered off during colder weather, the American Automobile Assn. said Tuesday.
The survey of national retail gasoline prices echoed the findings of a separate survey released two days earlier.
But the modest decline may be only a momentary respite in an upward price spiral that is likely to continue because increases in gasoline prices have lagged those of crude oil, from which gasoline is refined, analysts said.
On Tuesday, light, sweet crude oil for December delivery closed up 67 cents at $32.63 a barrel in trading on the New York Mercantile Exchange.
Meanwhile, the American Petroleum Institute reported Tuesday that stocks of crude oil increased for the first time in two months--to 344.5 million barrels in the week ended Nov. 2 from 339.5 million barrels the week before--as crude imports rose strongly to near pre-invasion levels. Crude supplies had fallen for seven weeks, as imports dried up under the U.N. embargo on Iraq and Kuwait.
Nationally, the automobile association reported that the price of self-serve, regular unleaded gasoline, the most popular grade, fell 0.3 cents a gallon last week to an average price of $1.377 a gallon.
It was the first decline since Sept. 18, when prices fell 0.1 cents a gallon, the AAA reported. Its survey, released weekly, polls 1,250 service stations nationwide.
“The decline is rather modest, but the positive thing that can be said is that . . . over the last three weeks, prices have stabilized,” said AAA spokesman Jerry Cheske in Orlando, Fla.
Two days earlier, the North Hollywood-based Lundberg Survey reported that the national average price of all grades of gasoline fell 0.18 cents a gallon over the previous two weeks to $1.4691 a gallon as of Nov. 2.
For Lundberg, it was the first reported decline since the Aug. 2 invasion. The Lundberg Survey, released every two weeks, polls 13,500 stations nationally.
“It’s a significant stall in the rise . . . that really masks a lot of regional differences,” said Trilby Lundberg, publisher of the survey that bears her name. “Prices on average were still rising on both coasts, while prices in the interior were volatile.”
Analysts attributed the falling national average prices to a seasonal drop in demand as motorists cut back driving. “This is the time of the year when gasoline prices head south, year in and year out,” said Scott Jones, an industry analyst and president of AUS Consultants in Philadelphia.
A weak economy and higher prices also are dampening gas demand, analysts said.
At the same time, supplies are ample: the American Petroleum Institute reported Tuesday that gasoline supplies rose last week to 221.2 million barrels from 220.4 million the week before.
Despite the price declines, gasoline remains much more expensive than before the invasion. Lundberg said national prices have risen about 29 cents a gallon since then; the AAA said prices have gone up 30 cents a gallon.
The two surveys diverged when considering regional price variations. Unlike Lundberg, the AAA, while not providing specific figures, reported that the price of self-serve unleaded gasoline increased slightly in New England and the Great Lakes states but fell everywhere else, including the West.
But Lundberg reported that prices rose on the East and West coasts while falling on the Gulf Coast, in the Midwest and the Rocky Mountains.
In Los Angeles, the cash and credit price of unleaded regular self-serve gasoline rose slightly to $1.3774 on Nov. 2 from $1.3719 two weeks earlier, the Lundberg Survey reported.
Both Cheske and Lundberg said they believed that gasoline prices would probably continue to rise in the next few weeks, in part to pass through the increases in crude oil prices.
Lundberg said gasoline prices have increased about 25% since the invasion, while spot prices for a key crude oil grade have gone up as much as 73% in the same time.
But Jones, the Philadelphia analyst, argued that ample supplies, softening demand, a looming recession and seasonal slowdowns would combine to move gasoline prices even lower. “I expect gasoline prices to continue to fall, and I think we’ll lose as much as a nickel at the pump over the next four to six weeks . . . barring a war,” he said.
Gasoline Prices Dip as Demand Slows The Lundberg and AAA surveys measure prices differently, but both indicate a slight drop in the national average price of gasoline. National average retail price for all grades of gasoline in dollars per gallon Lundberg: Nov. 2 $1,4691 Source: Lundberg Survey National average retail price, unleaded self-serve regular gasoline in dollars per gallon AAA: Nov. 6 $1,3770 Source: Computer Petroleum Corp/AAA
