The year-long decline in retail gasoline prices apparently has bottomed out, according to energy industry analysts.
"It looks as if we have hit the bottom line," said Dan Lundberg, citing an increase in wholesale gasoline prices charged by independent petroleum refiners, the first increase in 14 months.
A combination of declining petroleum imports, shrinking domestic fuel stockpiles and a more unified pricing policy by the Organization of Petroleum Exporting Countries may have braked the drop in gasoline prices, Lundberg and other experts said.
Lundberg noted that average gasoline prices have declined 14 cents a gallon since the first of the year, with 4.3 cents of that coming in the March 5-19 period, "an historically unprecedented drop," he said.
Gasoline prices were still moving downward in the latest nationwide marketing survey by Lundberg, based on data from 17,000 gas stations. He reported Sunday an average price for all grades of 117.83 cents a gallon including taxes, down 1.3 cents per gallon from the price two weeks ago.
But the price increase by the non-major refiners, ranging between a quarter of a cent to four cents a gallon, signals an end to that trend, he said.
Theodore R. Eck, chief economist of Standard Oil of Indiana, said the drop in crude oil prices worldwide has stopped. "West Texas prices are firming up, the North Sea is firming, none of the crude prices are going down--that's very clear."
Gasoline stocks peaked in mid-January, according to Energy Department statistics, about a month earlier than normal, leaving inventories on the low end of the normal levels for this time of year. Most refiners have been unable to produce gasoline profitably at current prices and refinery operations have been cut back accordingly, said John Lichtblau, president of the Petroleum Industry Research Foundation.
Imports of both crude oil and gasoline have fallen as well. Net imports of crude oil and petroleum products averaged 3.6 million barrels a day for the four-week period ending April 9, compared with 5.7 million barrels daily in the same period a year ago.
At current production levels, there is not much question that the demand and supply balance will shift the nearly 100 percent buyer's market of the past months to one in which sellers have greater leverage, Eck said.
"We've been saying for a month that the bottom is near," he said.
Lichtblau agreed. "I think prices have bottomed out. It may decline a little more," he added, but not much. OPEC, under Saudi Arabia's leadership, appears to be holding world oil prices at the $34 a barrel target level, he said, despite the availability of cheaper Iranian oil, and that is helping build a floor under gasoline prices, he added.
However, Lichtblau does not see any rapid upward movement in prices, either.
"We're talking about modest price increases, if any. They won't go back to where they were," at least not in the foreseeable future, he said. Lichtblau said he doesn't expect significant price increases until after July.
Eck said he could anticipate a rise of 10 cents a gallon by the end of the year, under current conditions.
However, in some areas where price cutting has been heaviest, the increase could be greater, particularly when the strong seasonal demand for gasoline begins after Memorial Day, industry officials said. Some gasoline prices in the Tulsa area rose by a dime in the past week, industry officials said.