ATLANTA -- Gasoline prices, already falling because of increased production and a boost in imports, could dip even more as refiners start selling less-expensive winter fuel blends later this week, said the Associated Press.
Gas stations nationwide will begin Friday to switch from the summertime fuel blends that cut down on smog during the year's hottest months, but also raise the price at the pump.
The switch could cause a marginal drop in gasoline prices that are already trending downward, analysts said.
The Environmental Protection Agency (EPA) requires that certain volatile chemicals be removed from gasoline sold between May 1 and September 15 so they cannot evaporate in the heat and react with pollutants to create ozone, a main component of smog; 15 metropolitan areas also levy their own stricter requirements in hopes of improving air quality.
We believe that reducing the volatility of the fuel is one of the most cost-effective ways of achieving cleaner air across the country, said Margo Oge, director of the EPA's Transportation & Air Quality Program (http://www.epa.gov/otaq/index.htm).
The summer blends cost about a cent per gallon more to manufacture, although they can cost 10 to 15 cents more per gallon at the pump, said Phil Flynn, an analyst at Alaron Trading Corp.
The transition back to winter fuels often has a less dramatic effect on fuel prices. If there is any price effect, it will be dwarfed or masked by the changes caused by the drop in crude-oil prices and a drop in gasoline demand, said Jonathan Cogan, spokesperson for the Energy Information Administration (EIA).
As oil production ramps up and the summer driving season ramps down, prices are already beginning to drop. Average gas prices fell to about $2.62 a gallon this week after having reached $3.04 last month, the Department of Energy (DOE) reported. The agency said it expected average prices of $2.55 a gallon by winter, but some forecastersincluding travel agency AAAsaid such price levels are just weeks away.
Production has picked up at the Gulf Coast refineries damaged in last year's hurricane season. Crude-oil prices have dropped from more than $78 a barrel in July to less than $64 as the Organization of Petroleum Exporting Countries (OPEC) confirmed that it would not cut back its supply, and Iran soothed jittery traders when it signaled that it would consider demands to stop uranium enrichment. The hurricane season, while not over, has not been as brutal as expected. And the fighting between Israel and Lebanon has stopped, easing concerns that the conflict could spread and affect oil production in the Middle East.
The big risk factors going into the summer driving season are gone, Flynn said.
Whatever effect the return of winter blends has, it will take time to translate into lower gasoline prices because refiners must sell the last of their summer blends. You can't just flip the switch, said Jim Tudor, president of the Georgia Association of Convenience Stores (GACS).
And even then, there is no certainty that any savings will be passed on. Although Georgia's summer blend costs as much as 10 cents a gallon more than the winter blend, there is no way to predict the sale price, said Richard Cobb, executive director of the Georgia Petroleum Council. There could be a few cents here or there, he said of savings. But I would say that any cents in that area certainly could be overtaken by world events, like Iraq or hurricanes.
Regardless, signs of dropping gasoline prices are welcomed by station managers tired of being blamed for rising prices and drivers upset at spending more money on the daily commute.
AAA said in a press release that the nationwide average price of self-service regular gasoline is continuing to fall and is 42 cents lower than it was on August 7, the date prices reached their highest point this year of $3.036 per gallon.
Wednesday's nationwide average price was $2.613 per gallon, according to AAA's daily Fuel Gauge Report. Prices have not been this low since April 7 when the national average price was $2.609 per gallon.
AAA said the recent sharp decline in the price of oil has helped push gasoline prices lower. Lower prices for both oil and gasoline are coinciding with the end of America's summer driving season and a sense this year's Atlantic hurricane season will not live up to the dire forecasts issued earlier this year.
Consumers should not be lulled into a false sense of security as gasoline prices drop, however, AAA warned. Gasoline priced at $2.60 per gallon is not a bargain in historical terms, it said, and most of the issues that have been pushing prices higher this decade remain.
The average price of self-serve regular was $3.014 one month ago. One year ago, the price was $2.967 per gallon, AAA said.
According to AAA, Hawaii has the highest average gasoline price in the nation at $3.278 per gallon. Idaho and Nevada have the next highest average prices; at $2.97 and $2.956 per gallon respectively. Ohio has the lowest state-wide average gasoline price in the nation at $2.309 per gallon. Missouri has the next lowest price at $2.316 per gallon, followed by Oklahoma with an average gas price of $2.359 per gallon.
Nationwide, the price of self-serve, midgrade gasoline averages $2.775 per gallon, a decline from $3.2 per gallon in the middle of last month, and down from $3.147 one year ago. Self-serve premium averages $2.874 per gallon nationwide; down from $3.316 one month ago. Premium averaged $3.263 per gallon at this time last year.
The national average prices for self-serve regular unleaded gasoline for AAA's mid-September survey for the last five years are: 2005, $2.967; 2004, $1.857; 2003, $1.687; 2002, $1.408; and 2001, $1.537.
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