State’s gasoline costs decline
California motorists last week saw their first relief at the pump since the Thanksgiving weekend, but analysts warned Tuesday that the reprieve would be short-lived.
The price of a gallon of self-serve regular dropped nearly a nickel to $2.583, according to the Energy Information Administration’s weekly survey of filling stations.
Despite the weekly drop, the first in seven weeks, the California average remained 16.6 cents higher than a year earlier, as the trend in the West ran counter to the lower year-over-year prices in most of the country.
Nationally, prices have followed a more traditional script in January, a slow month for driver demand. The U.S. average of $2.229 a gallon was off 7.7 cents for the week and 9.1 cents from a year earlier. Prices fell most dramatically in the Midwest during the week, off 13.3 cents to $2.077.
“In California, prices might fall to $2.25 or so, but it’s dropping like a rock in the Midwest, where they tend to cocoon a little bit in the winter months or travel south,” said Tom Kloza, chief oil analyst for Oil Price Information Service in Wall, N.J.
Kloza said aggressive price wars were driving the pump numbers lower in the Midwest.
In commodities markets, crude oil futures continued their recent free-fall -- declining $1.78, or 3.4%, to $51.21 a barrel -- despite world events that might otherwise have lifted prices.
In Venezuela on Monday, government officials said they would not negotiate with foreign energy firms regarding the potential takeover of some oil operations. In Nigeria on Tuesday, oil companies evacuated two facilities in the southern part of the country after violent clashes left 13 community chiefs dead.
And in California on Monday, a fire broke out at Chevron Corp.’s Richmond refinery, the Bay Area’s largest such facility.
Analysts attributed Monday’s price decline to unseasonably mild winter temperatures and comments by Saudi Arabia’s oil minister that he saw no reason for an emergency meeting of the Organization of the Petroleum Exporting Countries to discuss further cuts in production.
“Saudi Arabia is the voice that matters in OPEC,” said Phil Flynn, senior market analyst at Alaron Trading Corp. in Chicago, “and today what they were saying is that they think these price drops are short term and weather related and not long term and market driven.”
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