Gasoline Prices Decline Again

The retail cost of gasoline fell nationwide over the last week, but Californians continue to pay average pump prices that are higher than levels indicated by the state’s wholesale fuel prices.

Nationwide, the average retail price of self-serve regular gasoline slid 3.5 cents to $2.871 a gallon Monday, the Energy Department said, based on its weekly survey of filling stations. The average is 71 cents above year-ago levels.

California’s statewide average fell 2.7 cents to $3.198 a gallon, 84.6 cents higher than at this time last year, according to the government survey.

Although motorists have seen gasoline costs edge lower in recent weeks, the state’s average retail price “seems pretty high” based on the wholesale prices, said Andrew Lipow, a Houston-based consultant and former fuel trader. “It should definitely be coming down. I see more and more [gasoline] supplies going to the West Coast.”

That’s especially true in Los Angeles, where the average price at the pump fell 5 cents to $3.22 a gallon in the last week, the survey showed. Gasoline wholesale prices in Los Angeles, meanwhile, indicate that retail prices should be around $3.05 a gallon for self-serve regular, Lipow said.

The latest data comes on the heels of a California Energy Commission report that couldn’t fully explain a surge in retail fuel prices across the state to a record average of $3.332 a gallon May 8. Last week, the commission said the sharp jump had cost state motorists an extra $108 million compared with the prices paid by their counterparts on the Atlantic Seaboard.

Energy Commission officials said higher oil prices and seasonal production changes accounted for only part of the increase. Gov. Arnold Schwarzenegger ordered the commission to investigate further and report back again in August.

Prices on the Los Angeles spot market, where refiners and others can trade fuel for near-term delivery, are considered an indicator of future retail prices in much of the state. Traders who buy and sell on that market take into account the cost of crude oil as well as local market conditions such as refinery outages.

Leading up to the state’s record prices in May, the cost of California-grade gasoline on the Los Angeles spot market jumped $1.14 a gallon over 10 weeks, peaking at $2.97 a gallon May 2, the Energy Commission said. Spot prices don’t include gasoline taxes, transportation costs or dealer profit margins.

Since then, the Los Angeles spot price has dropped more than 67 cents, Lipow said. The retail average cost of gasoline in the city has fallen only 21 cents since peaking in early May, federal statistics show.

“I’m surprised that they’re taking so long to come down,” Lipow said of California’s gasoline prices.