Gas Prices Dip Again, Cheering Drivers

The average price of gasoline fell nearly 2 cents a gallon in California on Thursday, the biggest of three consecutive daily declines. Motorists welcomed the slight relief at the pumps as well as signs that the state’s gasoline crunch may be easing.

“I’ve noticed a few cents difference and it’s good. No one likes to pay higher prices,” said Mary Jo Yaggie of Chula Vista as she filled her Buick with $1.56-a-gallon gas.

Falling crude oil prices and a sharp rise in output at state refineries helped bring the average statewide price of self-serve unleaded regular to $1.522 a gallon, down from 1.54 on Wednesday and $1.543 on Tuesday, according to the U.S. Energy Information Administration.

The drop is consistent with forecasts by state energy officials that statewide gas prices have peaked and are on the way down over the next couple of weeks because wholesale prices are cheaper and the gasoline supply is growing.

Prices also fell an additional 2 cents a gallon at wholesale, to an average of 95.25 cents per gallon on Wednesday, from 97.25 cents on Monday and $1.02 on April 29, the California Energy Commission said. That drop will ultimately be reflected in lower prices at the pump, spokeswoman Claudia Chandler said.

The nearly 7-cent decline in wholesale, or “rack,” prices--a pretax price that dealers pay--already exceeds what motorists would realize from the proposed rollback of the 4.3 cents a gallon federal gas tax hike imposed in 1993.

Motorists remained skeptical, though, voicing concerns that prices will go back up during the Memorial Day holiday or summer vacation season. Many believe that the oil companies are conspiring to keep prices up.

“I haven’t noticed it yet, and I’m not optimistic that I’ll see any great drop,” said Tim Jackman, a steel contractor in El Cajon. “This is America and people are going to pay it and the oil companies know it.”

Ray Archard, an El Cajon tire dealer who runs a 15-truck fleet that sucks up $1,000 more a month in gas than it was before prices started rising, said he was glad to be paying $1.625 a gallon for diesel on Thursday, down from $1.695 five days earlier. Still, he’s worried about the effect of high gas prices on his business.

“It’s not enough to notice. It was $1.25 a gallon two months ago. We’re spending a lot more money in fuel costs, and there is no way we can recoup it,” Archard said.

In addition to a 23% jump in gasoline production at the state’s refineries, the drop in California gasoline prices reflects an improving global oil market. The end of a Norwegian oil workers strike, plus continued over-production by members of the Organization of Petroleum Exporting Countries are easing crude prices.

Crude oil for June delivery fell 32 cents to $20.68 a barrel on the New York Mercantile Exchange on Thursday, down from more than $24 a barrel during last month’s peak. Gasoline futures lost 0.87 cent to 67.50 cents a gallon.

Crude oil from Alaska’s North Slope, where 45% of California’s crude comes from, is now priced at $19.49 a barrel, down from $24.02 at the April 12 peak.

“We’ll see the decline in crude prices move throughout the [retail gasoline] system soon,” the commission’s Chandler said.

State officials also disclosed that despite the big jump in prices, statewide gasoline consumption is up 4% so far this year compared with last year. Commission Chairman Charles Imbrecht said the increase was partly due to higher freeway speed limits, which went into effect Jan. 1.

Times wire services contributed to this report.

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Pump Watch

After peaking on Monday, retail gasoline prices have started to edge lower. Daily price per gallon for self-serve regular unleaded in California:

Thursday: $1.522

Source: Energy Information Administration