Price of regular gas dips 1.8 cents in U.S.

$1.866-a-gallon average lowest in past 4 months

August 31, 2004|By BLOOMBERG NEWS

WASHINGTON - The average U.S. retail price for regular-grade gasoline fell 1.8 cents the past week to a four-month low of $1.866 a gallon, reflecting ample supplies and cheaper crude oil, the U.S. Energy Department said yesterday.

The average declined for the fifth week in the past six and is the lowest since $1.844 on May 3, the department said in its weekly report. Gasoline is down from records in late May as higher gasoline imports and domestic refinery production boosted U.S. fuel reserves to normal.

The price of crude, which makes up more than two-fifths of the retail cost of gasoline, has plunged from all-time highs this month. Prices may continue dropping if U.S. refiners can avoid major breakdowns, and Iraq and other Middle East countries can prevent terrorists from disrupting operations.

"If nothing weird happens, I suspect the price will continue to go down after Labor Day," said Jerry Huot, president of Baron-Huot Oil Co., which operates 12 filling stations in northeast Illinois. "Right now, the trend is down."

U.S. gasoline inventories are almost 8 percent above last year's levels, signaling ample fuel as the summer driving season winds down around next month. Gasoline demand peaks during the summer as people take to the road for vacation.

Consumption "begins to drop dramatically after the Labor Day weekend," Huot said. "The kids are all in school; nobody's taking vacations."

Pump prices declined in every region of the United States except the West Coast, the Energy Department said. Gasoline in Illinois and other Midwest states dropped 5.3 cents to $1.81 a gallon. East Coast gasoline slipped 1.3 cents to $1.858, while prices in Gulf of Mexico states fell 2.2 cents to $1.78. Gasoline in California and other West Coast states rose 4 cents to $2.06.

The Energy Department's gasoline average is based on a survey of about 900 filling stations in 50 states.

At Baron-Huot stores, regular-grade gasoline ranges from $1.84 to $1.91 a gallon, down about 8 cents over the past week, Huot said. The stores sell 1.6 million to 2 million gallons of fuel a month.

Oil prices dropped over the past week as a decline in political unrest in Iraq reduced concern that supplies from the fifth-largest Middle East producer will be disrupted. Crude futures traded in New York were $42.48 a barrel yesterday, down 14 percent from a record $49.04 reached Aug. 20.

Retail gasoline is still up over last year, reflecting higher crude-oil costs passed along by refiners. Fuel inventories lagged behind normal levels most of this year as motorist demand increased at a record pace, leaving the country vulnerable to supply disruptions during the summer.

The latest U.S. average is up 38.8 cents, or 26 percent, this year, and May 24 reached a record $2.064. Gasoline averaged $1.645 in August 2003.

The average U.S. price for diesel fuel fell 0.3 cent to $1.871 a gallon, the first decline in nine weeks, the department said.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.