Drop in gas prices first since May

July 10, 2000
Web posted at: 8:54 a.m. EDT (1254 GMT)

In this story: Still the highest prices Downward trend may continue RELATED STORIES, SITES

From staff and wire reports

CHICAGO -- Gas prices dropped an average of 4.45 cents a gallon nationwide during the past two weeks, the first extended decline since prices began skyrocketing two months ago, an analyst said Sunday.

The weighted average price of gasoline was $1.67 on Friday, according to the Lundberg Survey of 10,000 stations.

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A series of price increases since May had pushed the average cost per gallon of self-serve regular in Chicago to $2.13 a gallon, making Chicago the first city in the survey to exceed an average pump price of $2 per gallon.

But declines in the costs of gasoline in Chicago and elsewhere in the Midwest have fueled the nationwide price drop.

The Lundberg Survey of more than 10,000 gas stations reported Sunday that since June 23, the average retail price of a gallon of self-serve regular gasoline in Chicago fell 28 cents to $1.84 per gallon.

Although 9 cents of the decrease was due to the suspension of Illinois' gasoline sales tax, survey publisher Trilby Lundberg said a more significant factor contributed to the price drop.

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"The reason for the fall is that previous supply problems related to the new anti-smog formula are largely solved," Lundberg said.

Other Midwestern cities also showed significant gasoline price decreases in the survey. In Milwaukee, the average price of a gallon of self-serve regular dropped 29 cents to $1.66. In St. Louis, the average price decreased 11 cents to $1.50.

Gasoline producers had blamed skyrocketing prices on new federal regulations that forced them to manufacture and supply cleaner-burning fuel. They said the new fuel cost more to make, and the difference was passed on to the consumer.

But others said they suspected price gouging was behind the increase. Last month, President Clinton, Vice President Gore and several members of Congress called for a federal investigation, and the Federal Trade Commission opened a formal probe into the matter.

Although Midwestern prices have fallen, the region remained the place with the nation's highest gasoline prices, according to the survey.

Detroit topped the survey's gasoline price list, with a gallon of self-serve regular averaging at $1.88, down from $2.04 on June 23.

The nation's lowest gasoline prices were in Phoenix at $1.45 per gallon, up from $1.40 two weeks ago.

In other parts of the nation, retail gasoline prices either remained unchanged or increased somewhat, according to the survey. But the Midwestern price decreases were enough to offset the national average price.

The average national retail price of a gallon of self-serve regular gasoline dropped more than 4 cents per gallon to $1.62 per gallon during the past two weeks, according to the survey.

"Since we're still in the peak summer driving season, no huge decreases at the pump should be expected immediately," Lundburg said.

Other cities in the survey included Sacramento, California, where the average price of a gallon of self-serve regular was up 12 cents to $1.77. Reno, Nevada's average price, rose 6 cents to $1.63.

Los Angeles gasoline prices increased 1 cent to $1.60. Denver prices dropped an average of 1 cent per gallon to $1.62. In Honolulu, the average price increased 3 cents to $1.79, and 1 cent in Boston to $1.69 per gallon.

A journalist who covers the petroleum industry predicted the national downward price trend will continue, with oil prices possibly returning to $18 a barrel by the end of November. The current market cost of a barrel of oil is about $30.

"It might actually happen before the summer is up, that you will see crude oil prices go down significantly," said Jan Stuart, editor of Petroleum Intelligence Weekly. "Then (it will take) another two or three months before the prices go down at the pump and you're probably talking at around Thanksgiving if you want to have a real point to look at."

Stuart said U.S. oil refiners who he said had failed to adequately supply consumers and low international oil supplies in general were the main reasons behind the rising price of gasoline.

Reporter Lisa Price contributed to this report.

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The Lundberg Survey
Environmental Protection Agency
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Federal Trade Commission
Organization of Petroleum Exporting Countries - OPEC

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