Gas prices decline for 7th week

Gasoline prices have lagged behind crude prices on the way down, falling about 8% in California from the peak, about half the decline in oil futures. Analysts said gas station owners and refiners saw their profits squeezed during the first half of the year when oil prices surged and they might be trying to make back some of that money now that oil prices are falling.

"Gasoline didn't rise as fast as oil on the way up, so I wouldn't expect that it would fall as much on the way back down," said Edward Jones' Youngberg. "And the oil that's being priced today [on the futures market] isn't going to reach the pumps for a while."

Demand for gasoline in the U.S. has fallen as much as 4% from a year ago, said Andrew Lipow, president of Lipow Oil Associates in Houston. The government said last month that, through May, the number of miles driven by Americans had fallen for seven straight months -- suggesting that U.S. road travel could see its first annual decline since 1980.

Besides high pump prices, drivers also are coping with inflation, a weak stock market and continuing declines in housing prices, Lipow noted.

"With all of those factors out there, I don't think consumers are getting ready to jump back in their cars" despite the recent drop in gasoline, he said.

Demand is also falling in Europe and Asia, Lipow said. China has drastically cut back on driving and other energy use in an effort to cut air pollution before the Olympics start in Beijing on Friday. In addition, nearly 80% of Chinese consumers surveyed by marketing researcher J.D. Power Asia Pacific said they were driving less in the wake of their government's decision in June to increase gasoline prices by 17%, the firm said in a report released Monday.

--

martin.zimmerman@latimes.com