Gasoline prices trend down but hurricane season looms
U.S. refineries have managed to resolve some of their early 2007 production woes, and the more plentiful gasoline supplies again helped drive retail prices lower in California and around the nation in the last week, an Energy Department report showed Monday.
Some analysts said the decline was a brief reprieve in the early weeks of what was expected to be a more-severe-than-normal Atlantic hurricane season.
But others said that prices could continue to fall an additional 12 cents to 15 cents a gallon, based on a surge of imported fuel and recent drops in wholesale prices for gasoline.
Earlier in the year, the markets overreacted to supply problems and “got sloppy drunk on the prices,” said Tom Kloza, chief oil analyst for Oil Price Information Service in Wall, N.J.
Kloza predicted that gasoline prices would be lower during the Fourth of July holiday than they were over Memorial Day weekend, adding: “This is a little bit of sobering up that we needed.”
The average price of a gallon of self-serve regular gasoline fell 5.4 cents to $3.32 in California, according to the Energy Department’s weekly survey of service stations around the nation.
That was 9.5 cents above the year-earlier price.
Several stations around the state were selling gasoline for less than $3 a gallon, including the Valero pumps at the AAA Auto Spa car wash in Fountain Valley, where it was going for $2.99 a gallon.
Nationally, the average dropped 8.1 cents to $3.076 a gallon, which was still 17 cents higher than during the same week in 2006.
Two Gulf Coast refineries were shut down briefly last week, but for the most part it was another week of steady production, especially on the West Coast, said Antoine Halff, head of energy research at Fimat USA Inc.
Halff said the West Coast, for example, had gone from a “very depressed” 26.3-million-barrel supply in mid-April to a “near-average” 31 million barrels last week.
But some warned that the safety net was still frayed.
The Gulf Coast petroleum industry still hasn’t fully recovered from hurricane damage sustained in 2005, said Jim Haughey, chief economist for Reed Construction Data, a Norcross, Ga.-based company that compiles research for the construction industry.
As a result, weaker storms could result in the same level of disruption, Haughey wrote in a report titled “We Are Not Ready for Another Hurricane in the Oil Patch.”
In New York futures trading, oil for July delivery rose $1.21 to $65.97 a barrel after some analysts said the recovery of refinery production would outpace crude oil supplies, and ministers from the Organization of the Petroleum Exporting Countries said they saw no need to increase production.
