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Gas Prices Tumble 14 Cents

Further Declines Not Likely

By Joe Benton
ConsumerAffairs.com

January 22, 2007

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The average price of regular gasoline is down nearly 14 cents over the past two weeks.

For the first time since gasoline prices began a steady rise in 2005, the cheapest gallon of regular is found in the Motor City. That's right -- some of the nation's lowest prices are found in Detroit where the average price of regular unleaded gasoline is $1.86.

Statewide in Michigan regular gasoline is averaging $1.95 a gallon and that is the lowest statewide average there since March, 2005.

Across the country, the national average for self-serve regular is $2.18 a gallon, according to oil industry analyst Trilby Lundberg.

The national average for midgrade is $2.29, while premium sells for $2.40 a gallon, according to Lundberg's latest survey of 7,000 gas stations across the country.

The warm winter combined with no supply interruptions has left crude oil prices hovering around $51 a barrel, a drop of more than $25 since August and gasoline prices are now following oil prices down.

The good news for motorists is that prices should remain low for weeks, barring supply disruptions.

Lundberg said that a $4.32 drop in the price per barrel of West Texas Intermediate crude was responsible for nearly all of the gas price decrease.

The decline nearly cancels out the increases that occurred between November of 2006 and January of 2007, according to Lundberg.

Lundberg cited soft demand for home heating oil due to mild winter weather along with the failure of OPEC to comply with its November pledge to slash production for the price drop.

But she predicted any further price reductions are likely to be smaller, if they happen at all.

"It's unlikely we will see price drops of this magnitude in the near future," she said. "I'm not sure it's bottomed out, but the bulk of the price drop has already occurred."

Honolulu drivers are paying the most for regular gasoline at $2.81 per gallon.

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