Gas prices decline further
California’s average gasoline price fell below $3 a gallon on Monday for the first time since March 5 -- and the national average dipped to its lowest point since April 2 -- as the peak summer driving season began to wind down. The nation’s refineries also managed to avoid new mishaps that would have hampered supplies.
But if motorists were hoping for a repeat of the last half of 2006, when prices at the pump began a sustained decline that lasted through the end of the year, they will be sorely disappointed, analysts said. There may be another week or two of relief before prices level off and perhaps even increase.
“We are getting close to the end of the down cycle here,” said Tom Kloza, chief oil analyst for Oil Price Information Service in New Jersey. “We’re already in the eighth inning of it.”
In California, the average price of a gallon of self-serve regular dropped 8.8 cents during the week to $2.928, which was 28.3 cents below the same price a year earlier, according to the Energy Department’s weekly survey of gasoline prices around the nation.
California drivers paid as much as $3.461 a gallon on average in early May, although fuel soared higher than that at some gasoline stations. On March 5, the state average was $2.897 a gallon.
Nationally, the average price dropped 6.7 cents to $2.771 a gallon during the week ended Monday. That was 22.9 cents lower than the same week a year ago.
Prices are falling in part because of declining demand as Americans begin their usual August routine of ratcheting down on long trips, said Phil Flynn, vice president and senior market analyst for Alaron Trading Corp. in Chicago.
U.S. gasoline stocks fell slightly in the week ended Aug. 3, the most recent data available, but were still just 4.7 million barrels below the same period last year with 203 million barrels, far better than they had been through much of the year.
Still, the Energy Department has been warning about a tightening of crude oil supplies over the second half of 2007 and into 2008. That’s one of the reasons why analysts said that any disruption could halt the slide of gasoline prices and send them rising again.
“We’re not as comfortable on gasoline supplies as we could be. There will at least be some storm threats, and there isn’t much of a safety net,” Kloza said. Gasoline prices may “go down another 10 to 20 cents, and that will be it,” Kloza said.
In New York futures trading, news of a tropical depression gathering strength in the Atlantic helped send oil for September delivery over $73 a barrel.
But later in the day it became clear that the storm wasn’t headed for the petroleum complexes in the Gulf Coast region, and crude prices dropped, settling at $71.62 a barrel, up 15 cents.
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