Gas Prices at Pump Continue to Fall After Iraq War

U.S. average retail gasoline prices again fell over the last two weeks, as crude oil prices continued to drop after the war with Iraq, according to a nationwide survey released Sunday.

The national average for a gallon of self-serve regular gas fell 6.37 cents to $1.55 a gallon in the two weeks ended May 2, according to the Lundberg survey of 8,000 gas stations.

The latest average price was still nearly 13 cents higher than the $1.42 per gallon from last year’s May 3 survey.

The most expensive gasoline in the nation was found in the San Francisco Bay Area at $1.99 a gallon, and the cheapest gas was available in Tulsa, Okla., where a gallon of regular was going for $1.28, according to the survey.

It was the third straight two-week drop, adding up to a decline of more than 18 cents a gallon since prices peaked March 21 at an average of $1.76 a gallon.

“We have seen a drop of more than 18 cents per gallon over the last six weeks,” said Trilby Lundberg, editor of the survey.

The drop in gasoline prices reflects a more than 30% decline in the price of oil since the start of the war. Crude oil prices reached almost $40 a barrel before the war and now are near $25.

Prices fell further after the Organization of the Petroleum Exporting Countries said it would cut back less than expected the extra crude it pumped in the run-up to the war.

Lundberg said that for various reasons OPEC’s action, which sets a ceiling of 25.4 million barrels a day effective June 1, might not lead to higher prices at the pump.

The reasons include increasing production in Iraq, the potential for non-OPEC producers to produce more, the possibility that OPEC members won’t abide by the new production targets, low seasonal demand in June and the damping effect the SARS virus is having on travel, Lundberg said. OPEC’s 11 members pump about a third of the world’s oil.

“Crude oil prices had several dollars extra per barrel built in prior to the war in Iraq because Iraq had threatened to destroy its own oil resources, and that was prevented,” she said. “The response of the oil market was a price crash.

“Crude oil is down and gasoline supplies are up. That combination brings lower prices at the pump,” Lundberg added.

The national weighted average price of gasoline, including taxes, at self-serve pumps Friday was about $1.65 for mid-grade and $1.74 for premium.