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Oil Prices Plunge, Gas Prices Puddle

Market Forces Taking the Winter Off?

By Joe Benton
ConsumerAffairs.com

January 12, 2007

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U.S. gasoline price declines are lagging far behind oil prices than have plunged to levels not seen since May of 2005.

The average price of a gallon of regular self-serve gasoline is down slightly more than a nickel in the last week and a penny in the last month.

By contrast, crude oil has tumbled by 15 percent so far this year, in part because of the warm U.S. winter that has left supplies of heating fuel barely touched.

The National Oceanic and Atmospheric Administration reports that unseasonably warm weather in the Northern U.S. is likely to continue through March.

Reports of rising exports from the Organization of Petroleum Exporting Countries also are weighing on oil prices.

Oil industry analysts repeatedly pointed to supply and demand economic theory to justify rising prices following Hurricane Katrina -- but the lack of any corresponding decrease in price as supplies increase amid weak demand is raising eyebrows.

Democrats on Capitol Hill have promised to use their new power in Congress to investigate allegations of price-gouging by the oil industry.

The average price for a gallon of regular gasoline is now $2.27. Last month regular average was $2.28 and last year it was $2.33.

Mid-grade gasoline now sells for an average price of $2.41 and premium for $2.50.

The cheapest gallon of gasoline is on sale in Perryville, Missouri for $1.89. The most expensive sells in Kuilua Kona, Hawaiifor $3.11.

Here is a look at some gasoline prices from around the country in the ConsumerAffairs.com Gas Price Round Up.

California: Crude oil prices careened downward like a roller coaster in the past week, while Southern California gas prices inched down at a snail's pace, according to the Automobile Club of Southern California.

The average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $2.62, which is eight-tenths of one cent lower than last week, 16 cents higher than last month, and 26 cents higher than last year.

In San Diego, the price is $2.67, which is 1.4 cents below last week's price, 13 cents above last month, and 24 cents above last year.

On the Central Coast, the average price is $2.81, down 3.1 cents from last week, 10 cents above last month, and 30 cents higher than last year.

In the Inland Empire, the average price is $2.63, one-tenth of one cent below last week, 14 cents higher than last month, and 24 cents higher than last year.

"Oil industry analysts say that the severe drop in crude oil prices does not have as big an impact on California prices as it does in other states because of our limited sources of refined gasoline," said Auto Club spokesperson Carol Thorp.

"California prices for the next month or so will be dictated by whether our state's refineries have adequate supplies of gasoline for motorists before the annual switch-over from the winter blend to the summer blend of gasoline, which is mandated by air-quality requirements," she said.

Texas: The first two weeks of the New Year ended with a downturn in gas prices. The average price for self-serve regular gasoline in Texas is $2.17, down four cents.

The Austin area has the highest average on the survey at $2.21 a gallon, down three cents. Corpus Christi has the cheapest priced gas on the list at $2.07 a gallon. That is a decrease of seven cents for the week.

"The price of crude oil fell to a 19-month low this week, below $55 a barrel, amid growing inventories of gasoline and weak demand," said Rose Rougeau, spokesperson for AAA Texas. "If the price of crude stays down, consumers should see gas prices continue to slide lower."

Michigan: Gasoline prices are down a gallon of regular can be purchased for as low as $1.88, in some parts of the state.

Lake Wixom and Walled Lake had gas at that price, and several others were selling gas for just a few pennies more. Earlier this week long lines formed at a Center Line gas station offering gas for $1.99 a gallon.

In Detroit, two stations are selling gas for $1.99 a gallon. In Southgate gas is selling for $1.99 a gallon. At a station on Dix in Lincoln Park, gas sells for $1.95 a gallon.

Today's prices at some Metro Detroit stations reflect a savings of more than a quarter per gallon.

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