U.S. fuel prices drop as hurricane stays away

Retail gasoline prices declined again in California and nationally over the last week and crude oil futures did the same Monday as the one force with the power to raise them -- Hurricane Dean -- blew toward Mexico’s Yucatan peninsula, far south of U.S. oil rigs and pipelines in the Gulf of Mexico.

“Disorganized shower activity” was all that the U.S. Gulf Coast area was expected to suffer, the National Hurricane Center in Miami said Monday. That eased concerns about disruptions in the nation’s production and supplies

“It was the tide that lowered all boats,” said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.

Only a few of the oil companies in the gulf said they were making precautionary evacuations of nonessential workers. Farther south, in the Campeche Sound, about 18,000 workers of Pemex, Mexico’s state oil company, were evacuated from the path of the storm as production was shut down.

Speculators betting that the hurricane might swing farther north had boosted crude oil above $73 a barrel last week, Kloza said. On Monday, crude oil futures for September delivery on the New York commodities market fell 86 cents to $71.12 a barrel.

Several analysts predicted that oil prices wouldn’t fall much further.

“As long as the stock markets shows signs of stability, $70 oil will look cheap and the demand will not slack off significantly,” said Phil Flynn, senior market analyst for Alaron Trading Corp. in Chicago.

Antoine Halff, head of energy research at Fimat USA Inc., said oil “will remain relatively insulated from downturns in other parts of the financial markets.”

Although oil prices are holding fairly steady, drivers are continuing to see declines at the pump. According to the Energy Department’s weekly survey of filling stations around the nation, the price of a gallon of self-serve regular fell 6.6 cents in California to $2.862 -- 30 cents below the year-earlier price. Nationally, prices fell 1.4 cents to $2.785, 13.9 cents lower than the same week in 2006.

Helping lower those prices, experts said, was the other good news coming out of the gulf region petroleum facilities, which were devastated by Hurricane Katrina in 2005. The oil rigs, pipelines and refineries are more than 90% repaired, said Jim Haughey, chief economist for Reed Construction Data.

“There has been substantial progress,” he said.