Gasoline prices fall again, but the bottom may be near
Pump prices fell again during the last week in California and nationwide, the Energy Department said Monday, but an analyst warned that the decline may level out substantially above last summer’s averages.
The average price of a gallon of regular gasoline in California dropped 4 cents to $3.90, according to the Energy Department’s weekly survey of service stations. That’s down 35.7 cents since the 2011 peak May 2, but it remains substantially above the year-earlier average of $3.10.
Nationally, the average declined 6.1 cents to $3.652 a gallon, which was still 90.9 cents higher than a year earlier.
Some analysts said a combination of rising demand for fuel and the long-term loss of crude oil exports from Libya eventually would begin to squeeze oil and fuel supplies. Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, said average gasoline prices would level out about 75 cents above the year-earlier average.
“We will probably be scraping the bottom here soon on prices this year,” Kloza said. “I think we will drift lower for another few weeks, but we won’t be approaching last year’s price levels.”
That would leave California’s average price at about $3.85 a gallon and would put the national average at about $3.51 a gallon.
Others weren’t so sure, citing the downward pull on commodities that was exerted during at least part of the trading day because of concerns about the debt levels of a number of European countries. Fuel price analyst Bob van der Valk said the debt concerns should continue to drag down the price of oil.
“Fear of the PIIGS virus has infected the oil markets, and those fears have nothing to do with another bird flu type of virus, but with the debt contagion facing Portugal, Ireland, Italy, Greece and Spain,” Van der Valk said.
Crude oil for July delivery closed up 25 cents at $93.26 a barrel on the New York Mercantile Exchange after falling to as low as $91.14 a barrel earlier in the day. The U.S. benchmark contract has declined 18% since peaking at $113.93 a barrel April 29.
Brent crude oil for August delivery fell $1.52, or 1.3%, to $111.69 a barrel on London’s ICE Futures Europe exchange.