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Gasoline prices drop in California, U.S.

The average price in the state falls 3 cents to $2.261 a gallon, the first decline since Dec. 15. Nationally, the average slides 5.5 cents to $1.909.

February 24, 2009|Ronald D. White

Retail gasoline prices provided good economic news as prices dropped in California for the first time since Dec. 15 and the national average fell by more than a nickel over the last week, the Energy Department said Monday.

The price of a gallon of self-serve regular gasoline in California fell 3 cents to $2.261, according to the Energy Department's weekly survey of filling stations. The state's average price was considerably better than the year-earlier average of $3.328 a gallon.

Nationally, the average fell 5.5 cents to $1.909 a gallon. A year earlier, the U.S. average stood at $3.130 a gallon.

Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, said the price drops were a sign that fears of a repeat of the record price run-up of 2008 and a quick return to $3-a-gallon gasoline were unfounded.

After concerns about a possible strike by refinery workers and a brief run of oil to near $50-a-barrel levels, wholesale gasoline prices dropped as much as 35 cents a gallon, depending on the regional market, over the last week, Kloza said.

"Retail prices gave up more than 5 cents a gallon of the gains that accrued in January and February and may soon flirt with levels below $1.90 a gallon" nationwide, he said.

Jeff Spring, a spokesman for the Automobile Club of Southern California, said that part of the drop might be attributable to the last sales of winter blend gasoline, which is being dumped at lower prices. By state requirement, Southern California counties are required to be fully switched over to more expensive summer blend gasoline by April 1, he said.

Demand for gasoline still wasn't showing any signs of a revival. Motorists were continuing to drive less than they have in the past, in part because job losses, declining home values, and decimated savings and investments were overwhelming any relief that might have been felt from cheaper fuel.

Doug McIntyre, a senior oil market analyst with the Energy Department's Energy Information Administration, said that Americans were burning an average of 8.895 million gallons of gasoline a day in the four-week period that ended Feb. 13. That was a decline of 1.2% compared with the same period in 2008.

"That's less than the 3% to 4% declines we were seeing as recently as late 2008, but demand is still down," McIntyre said.

Demand for crude oil, meanwhile, was down so low that not even a near full compliance in promised production cuts from the Organization of the Petroleum Exporting Countries was enough to rein in a glut of supply and give the commodity a boost, said Phil Flynn, vice president and senior market analyst for Alaron Trading Corp. in Chicago.

Crude oil futures for April delivery were down $1.59 and closed at $38.44 a barrel on the New York Mercantile Exchange. U.S. oil supplies were 45.3 million barrels higher than they were at the same time last year and stood at 350.6 million barrels.


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