Seasonal run-up in gasoline prices taking a breather this summer
Gasoline prices are stepping out of line this summer. Happily for the consumer, the trend is down for once, not up, as it usually is at this season. ''Traditionally, gas prices are higher in the summer,'' says Allan Wilbur, a spokesman for the American Automobile Association. Because of increased summer demand, ''prices pick up on Memorial Day and fall back on Labor Day,'' he says. Mr. Wilbur and industry analysts had expected a repeat story this summer.
Instead, an AAA survey found that July 4 gas prices this year were the lowest since 1979 - and this summer's and last summer's prices include a 5-cent federal gas tax. The average nationwide price of gasoline for the July 4 period was $1. 246, the survey found, about 2 cents lower than the same time last year and 0.3 cents below the Memorial Day average. This average includes full- and self-service prices and both leaded and unleaded gas.
It looks as if prices will go down before they go up, analysts say. ''Once again, dealers are lagging behind the wholesale cut, and that suggests further adjustments downward,'' Dan Lundberg told a United Press International reporter. Mr. Lundberg publishes a nationwide survey of gasoline prices.
No one factor is responsible for the price flip-flop, but the basic reason is a surplus of gasoline on the market. At the same time, Americans are driving more-fuel efficient cars, and ''while the miles driven may be going up, ... consumption of gas overall has been declining,'' says Wilbur. Gas use peaked back in 1979, at 7.4 million barrels per day. For the first five months of this year, consumption is idling at an annual rate of 6.5 million b.p.d., about even with the same time last year.
Earlier this summer, some oil-producing countries got the Mideast jitters. Fearing a disruption of supply because of the Iran-Iraq war, they upped their exports. Importers, also eyeing the war, increased their stockpiles, adding to the glut.
But ''in the short term, (worldwide) overproduction had very little to do with the gas markets,'' explains Lawrence Goldstein of the Petroleum Industry Research Foundation in New York. ''It is a function of the refineries.''
His explanation: The cold winter, bumping into spring, and the recovery surge in trucking traffic, drained home heating oil and diesel fuel inventories to unusual lows. To rebuild those inventories, refiners had to process more crude. While this produced the heating and diesel fuel they wanted, it also produced gasoline - more gasoline than the market needs.
Surprisingly, analysts haven't noticed the refiners turning off the tap yet. Refiners expect crude to drop in price, surmises Joan Showstead, editor in chief of Platt's Oilgram Price Report, so they might as well refine the crude they have in stock and ''get what they can'' at the gas pump.
One type of gasoline that's not dropping its price is diesel fuel. Truckers are racing along with the economic recovery, and the pickup in demand there has pushed up diesel prices. Expect another price bulge this fall, when the federal tax on diesel will increase from 9 cents a gallon to 15 cents.