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Gas Prices Settle in Above $3

By Joe Benton
ConsumerAffairs.com

May 11, 2007
The government is warning that gasoline prices aren't expected to fall much below $3 a gallon throughout the summer because of continued strong demand from motorists.

The Energy Information Agency, the statistical arm of the Energy Department reports that high prices should spur more production and importation of gasoline but prices are unlikely to fall far below a nationwide average of $3.03 a gallon anytime soon.

Unleaded regular gasoline is now selling for an average nationwide price of $3.04 a gallon, mid-grade is selling for $3.22 and premium $3.34.

One month ago regular sold for $2.79 and one year ago it sold for $2.88.

The government predicts prices will fall in June and July to about $2.90 a gallon but also warns that the projection assumes no significant unplanned refinery outages or crude oil production losses.

The high prices have prompted the Texas legislature to consider suspending the state's 20-cent gasoline tax over the summer as prices begin to hit the $3 mark in some areas of Texas.

Average gasoline prices are now above the $3 level in 24 states and the District of Columbia with California posting the highest average price at $3.49, a record high.

The most expensive gallon of regular gasoline is also on sale in California in Lee Vining for $3.99. The cheapest gallon sells in Oak Grove, Kentucky for $2.65.

Here is a look as some gas prices from around the country in the weekly ConsumerAffairs.com Gas Prices round Up.

California: Increases in gasoline prices in the Bay Area and statewide have slowed during the past few days, according to AAA of Northern California, suggesting that the recent run-up in fuel costs may have reached a plateau.

Prices in Oakland averaged $3.51 which is a record high. In San Francisco, regular cost $3.61, about a cent below the city's all-time high set on Sunday.

California motorists have been battered by record-high pump prices this year. The question remains whether the slowdown is temporary or is simply a head fake before prices start rising again.

During the current three-month run-up, gas prices have increased as a much as a couple of cents per day. Recently, the upswing has been more leisurely, with daily price increases of a couple of tenths of a cent.

There is no clear explanation for the slowdown. Increased gas production, imports from out of state and motorists curtailing their driving in the face of exorbitant costs at the pump may have contributed to the leveling off.

Gas prices started rising in February, driven in part by rising crude oil prices and tight gasoline supplies. The extra costs have been painful for many California drivers, who are now paying some of the highest prices in the nation, around 80 cents more per gallon than they did at the start of the year.

Texas: The Texas House tentatively approved a bill that would suspend the state’s 20-cent gas tax through the summer months. That would mean an immediate 20-cent drop in the price per gallon.

“The more cars you have, the more relief you get,” said Rep. Trey Martinez Fischer, a San Antonio Democrat who added the proposal to an omnibus tax collection bill.

The House voted 118-16 to give preliminary approval to the bill. Final approval is expected later this week.

The retail gasoline price spike in Texas resumed in earnest this week after a marginal increase last week, according to the weekly AAA Texas gasoline price survey released Friday.

Retail prices of regular-grade gasoline rose an average of 9 cents to $2.87 per gallon in the 11 Texas cities surveyed.

“Motorists saw gas prices skyrocket this week, with the city of Amarillo showing a 15 cents increase in only one week,” said AAA Texas spokeswoman Rose Rougeau. “Strong consumer demand, reduced domestic output due to refinery problems and lower imports continue to push prices higher.”

Of the 11 cities in the survey, Amarillo had the highest average price of regular grade at $3 per gallon. The cheapest gas was still in Corpus Christi, where regular grade prices rose 10 cents to an average of $2.79 per gallon.

Oregon: Oregon still has the third-highest gas prices in the nation, at an average of $3.38 for a gallon of regular, according to AAA.

"In the past month, we've seen the national average price move up 27 cents a gallon (to $3.04). At the same time, Oregon's statewide average shot up by more than 39 cents," said Elliott Eki, spokesman for AAA Oregon.

Filling up in California costs the most nationwide, at $3.49 a gallon, and Washington state cruises in second, at $3.41.

West Coast prices have soared with tight gas inventories and oil refinery problems, Eki said. There could be relief in sight, depending on the price of oil.

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