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A gallon of gas on track to stay below $3 this spring

With crude oil stocks high and gasoline demand low, US drivers may get a reprieve from the customary spring spike in gasoline prices this year.

By Ron SchererStaff writer / April 7, 2009

Dawn Spiker filled up her convertible at the Costco gas station in Oxnard, Calif., in October. She paid $2.47 a gallon then. Now the national average is $2.05.

Jason Redmond/AP

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Almost every year for the past 15, this is the week that gasoline prices begin their spring surge. But motorists may be spared this year, say energy analysts.

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The reasons: A huge amount of crude oil is available for refiners, and gasoline demand remains relatively low, meaning refiners are spending more time playing dominoes than producing fuel.

“All the pieces are in place this year for it not to spike up,” says Phil Flynn, director of research at Alaron Trading in Chicago.

If prices don’t soar this spring, that will be a departure from the past two years, when gasoline prices spurted higher as consumers fumed. In 2007, with refineries running at maximum capacity, gasoline at the pump jumped almost 50 cents a gallon, landing at $3.25. Last year, crude oil peaked at $147 a barrel, and by July some consumers paid as much as $4.11 a gallon, according to the AAA.

“It hit lower- and middle-income consumers more than upper-income people,” recalls Dennis Jacobe, chief economist at Gallup Inc. in Washington. “What you saw was that people had to reallocate their funds to gasoline and spend less on other things.”

This spring, if gasoline prices don’t spike, it will be a good thing for lower-and-middle income people, says Mr. Jacobe. “It helps to maintain spending. Whether it improves it is dubious,” he says. Gasoline prices are currently about $2 a gallon, according to AAA, almost $1.30 lower than at this time last year.

The lower prices might help some travelers this Easter weekend, a time when many Americans visit relatives. “There are a lot of intergenerational visits with grandparents having time with children,” says Geoff Sundstrom, a spokesman for AAA in Heathrow, Fla. “It’s a family holiday.”

One family planning to be on the road this weekend is the Izaks of Chicago. Jamie Izaks, his wife, and their two children will pile into the family SUV and drive 220 miles to Indianapolis to visit his parents and sister.

“I would say we’re looking at spending $100 on gasoline this weekend, and we’ll still have some gas left over,” says Mr. Izaks. “Last year, we would have spent closer to $200.”

This week in The Woodlands, Texas, a suburb of Houston, some families who plan to be on the road are taking their cars in for tune-ups and servicing at Christian Brothers Automotive, a chain stretching from Texas to Georgia.

“We are definitely seeing an influx of people who are making sure their vehicles are tuned up and ready to go for the trip to grandma's,” says Jeff Toth, owner of the local franchise. “Over the last year, people were parking the SUVs, but now we’re seeing people bringing out the family vehicles to go on the trip.”

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