THE NATIONAL retail price for gasoline dropped to just under $1.04 a gallon last week, the lowest level since April 1994, the U.S. Department of Energy said.
In its weekly survey, the Department of Energy said gasoline prices were down 1.5 cents from the previous week and down about 19 cents a gallon from the same period a year earlier. Since reaching a peak last August, the price for gasoline has dropped almost 21 cents a gallon, the department said.
The low prices have translated into more car travel in Maryland. From July 1997 through December 1997, Marylanders have used about 1.7 percent more gasoline -- a total of 1.3 billion gallons -- than the same period a year ago.
Why the decline in gas prices? How low will they go? What may cause gas prices to rise again? And, when?
Marvin Bond
Assistant Maryland state comptroller
Gasoline prices are on a cycle. A requirement designed to limit emissions from cars and other vehicles for the last six years means that reformulated oil must be in storage tanks by May 1 of each year, and at gas stations on June 1.
That means there's a glut on the market right now of typical winter-grade gasoline. So we may see some further decline in gasoline prices.
Once the reformulated gas product comes in, the prices will begin to rise again, especially around Memorial Day. The increased prices will be in response to the increased cost of the reformulated product, and to the increased demand for gasoline that happens every spring.
The low prices can also be blamed on El Nino. Demand has been low pretty much across the country because we've had a warmer than normal winter. Out of each barrel of crude, not much is being used for heating oil, so that also explains the glut of gasoline on the market. With no blizzards or other major weather events to keep people inside and off the road, people are out driving.
Joseph Coale
Spokesman, Crown Central Petroleum Corp., Baltimore
It's a basic lesson in Economics 101. The demand for gas is good but supply is better. The demand has slacked off in certain parts of the world like in the Far East, due to its recession, so we have more supply worldwide right now and that has led to a drop in the price.
Another factor is that in the second and third quarters of 1997, we saw phenomenal margins in gasoline. A high profit rushes more supply into the market and that supply came in the fourth quarter and has beaten down prices.
