Falling Gasoline Prices Slow to Reach the Pump

For professional petroleum traders, prices for unleaded gasoline have tumbled to the level they stood at just before Iraq invaded Kuwait, but for motorists, prices at the pump are near all-time highs.

If past pricing trends hold true, ordinary consumers will find that the law of gravity doesn’t necessarily apply in the energy business. One consumer activist group said Thursday that for the next few weeks at least, customers of the friendly neighborhood filling station likely will get gouged.

“When prices go up, they raise prices immediately,” said Edwin S. Rothschild of Citizen Action in Washington. “When prices in these futures and spot markets go down, it takes a long time for the savings to be passed on. That’s the way the companies take advantage of changing market conditions.”

The oil industry, which maintains that prices are set by supply and demand, says pricing is not such a simple thing.

The American Petroleum Institute has acknowledged there are times when savings have not been passed along promptly to consumers, but it has also pointed out trends in which crude oil prices were rising at the same time the pump price of gasoline was falling.

The industry has asserted that all recent probes into petroleum pricing have given oil companies a clean bill of health.

But Rothschild said a comparison of recent prices shows that consumers are paying too much.

“From the beginning of November to December, there’s been a 20-cent-a-gallon drop in the spot price of gasoline, and yet there’s been barely any decrease at all in the (pump) price of gasoline,” Rothschild said. “My suspicion is, if anything, we should now be much more concerned about oil companies ripping consumers off.”

On the New York Mercantile Exchange, the leading market for petroleum contracts, wholesale gasoline prices fell below 65 cents Thursday, to the approximate level they were at right before Iraq invaded Kuwait on Aug. 2 and caused a spike in the price of oil.

But the latest nationwide survey by the American Automobile Assn. found the average price of a gallon of self-serve regular unleaded to be $1.387. That’s 31.2 cents higher than the price on Aug. 1, and just 0.1 cent less than AAA’s highest recorded price of $1.388, just before the Easter holiday in 1981, the AAA said when the survey was released Tuesday.

Gasoline was up 2.1 cents for the week, and AAA pointed out that it probably would have fallen a few cents for the week had it not been for the imposition of an additional 5.1-cent federal tax, which took effect Saturday.