Gasoline prices have fallen steadily in the Washington area since they peaked last April. Oversupply, new competition and increasing use of fuel-efficient automobiles have driven the average price at the pump down five to six cents per gallon.
That average is now $1.40 a gallon, according to surveys by the American Automobile Association's Potomac Division.
"There's one heck of a glut of product right now," said Amoco representative Jim Fair. "We don't know how long it will continue, but I doubt we have seen the lowest price yet."
Even so, gasoline prices today are still higher than they were one year ago, according to the AAA surveys. The average for the metropolitan Washington area was $1.355 a gallon when the government decontrolled gas prices last January.
After decontrol, the average price spurted upward, finally hitting an average of $1.454 in April. Since then the average has been declining, to $1.441 in May, $1.440 in June, $1.422 in September and $1.406 in December.
Gasoline prices also have been dropping in other parts of the U.S., although not quite as much as in the Washington area.
The Consumer Price Index, for example, shows that gasoline prices fell 3 percent in the U.S. between March and December, compared to a 3.4 percent drop in the Washington area.
Reductions in pump prices reflect efforts by the oil companies and the retail operators to sell excess gasoline that resulted from a drop in consumption in both the U.S. and other industrialized nations plagued by sluggish economies. Conservation efforts by motorists driving new fuel-efficient cars are also a factor.
Late last year, some firms, including Sunoco and Shell, sweetened the lure with giveaways. Shell handed out free National Football League posters. Sunoco offered discounts on digital watches. Both of those programs were for limited times and haven't been renewed.
But both Sunoco, Shell and other major gasoline companies are continuing to cut prices to their dealers as part of their marketing strategies to increase sale volume.
Sunoco has decreased its Washington area wholesale prices by 10 cents a gallon in the last 10 months. The last price reduction was Jan. 8, when the wholesale price went down one cent a gallon.
Other major suppliers that have lowered wholesale prices include Exxon, down 7.3 cents a gallon for leaded and unleaded regular between March 14 and Jan. 15 and down 6.3 cents a gallon for unleaded premium; Shell, down 8 cents a gallon on all grades since March, and Amoco, down 7.5 cents a gallon for leaded and unleaded regular since February and down 5.5 cents a gallon for premium unleaded.
In addition, the major companies typically offer dealers a rebate on gasoline sales exceeding established minimums. Under the January rebate program for Exxon dealers in the Washington area, the dealer who sells 70 to 90 percent of the gasoline he sold last year will receive a rebate of 4 cents a gallon on the extra sales. If he sells more than 90 percent, he will receive a 6 cent rebate on the extra sales.
Although motorists may applaud such deals for helping lower gasoline bills, some gas station officials are less than enthusiastic about them. Victor Rasheed, executive director of the Greater Washington-Maryland Service Station Association Inc., said that oil companies "are preying on the consumer's search for lower prices . . . and forcing dealers to compete and cannibalize each other in search of volume during a period of declining sales."
In short, Rasheed said, "the poor old dealer is really getting it."
Bethesda Shell Service owner Joe Gordon said his sales dropped significantly in the past year, despite price cuts and football poster giveaways. But he is philosophical about the slump. "Every dealer I've talked to is down," said Gordon. "But it's like everything else right now--jewelry stores or any other kind of business--they are all down because the economy is down."
Across the District of Columbia line, Amoco dealer Jack Conner said he has had the same prices and the same volume of sales for at least six months at his two stations at 5001 and 5532 Connecticut Ave. NW. Conner said he is "doing fine" because his stations are in stable residential areas with regular customers. "I think that in some Maryland locations competition is a problem; they all are dropping prices to sell more gasoline."
Washington area prices vary widely. The latest AAA survey shows that the average Maryland price is lowest at $1.38 a gallon, D.C. is highest at $1.45 and Virginia is in the middle at $1.418.
Motorists who shop around will find that they will pay more or less than those averages depending on the station. And sometimes they have only to drive a few feet to the next station to save money.
In Prince George's County, at 6900 Marlboro Pike, there is a self-serve Mapco station next to a Mobil full-service station. The Mobil sells regular leaded gas for $1.259 a gallon--a dime more than the Mapco price of $1.159 a gallon. Unleaded regular at the Mobil sells for $1.299 a gallon--eight cents more than Mapco's $1.219.