A Fuel-Good Story At Summer's End
Tuesday, August 29, 2006
The declining prices of crude oil and ethanol combined with rising gasoline supplies have brought a bit of welcome relief at the pump as the summer driving season draws to a close.
Average gas prices have dropped about 15 cents in the past two weeks, to $2.87 per gallon nationwide and $2.99 in the Washington metropolitan region, Trilby Lundberg, editor of the Lundberg Survey, said yesterday. The gasoline monitor surveys more than 6,000 stations nationwide every two weeks.
The decline, based on a survey from Friday, is the largest drop since November, when prices fell 18 cents after the price increases that followed hurricanes Katrina and Rita.
And as if this weren't enough good news for consumers, Lundberg and others said more relief should be on the way, as long as crude oil prices remain stable and no supply disruptions occur.
Lundberg said in a telephone interview that the gasoline market was in a "mini-glut" state, with prices tumbling in the face of increased supply at the end of the peak driving season.
"Given other situations not confounding it . . . some further reduction seems likely from here," she said.
Lisa Craig, 47, a teacher at Holton-Arms, a private girls school in Bethesda, was thrilled to see regular gasoline selling for $3.09 a gallon at a Wisconsin Avenue Texaco station in Bethesda -- even though she was just in New Hampshire, where, she said, gas was in the $2.70 range.
"Life's got to be a little better if gas is going down," said Craig, who shuttles three carloads of children home in the afternoon. "I went, 'Wow, $3.09, that's not so bad!' And that's pathetic."
The recent price drop was particularly pronounced because this year's driving season was greeted by rising prices caused by several factors. Prices for ethanol, an additive increasingly used by refineries, shot up this year. Demand grew sharply after the Energy Policy Act passed by Congress last summer prompted refineries to switch from methyl tertiary-butyl ether, or MTBE, to corn-based ethanol as a gasoline additive. As demand rose, ethanol prices climbed to more than $4 per gallon.
The industry also was hampered by delayed repairs and maintenance because of last year's hurricanes.
Also pressuring prices was the violence and uncertainty in the Middle East and elsewhere, raising concerns about oil supplies throughout the summer.
In recent weeks, ethanol prices have dropped to about $2.30 a gallon. Worries over supply have largely subsided as oil companies have made the transition, analysts said.