Chris Chrisakis fills up

Chris Chrisakis fills up his van at the CITGO at 33rd Street and Greenmount Avenue, where regular was going for $1.97. (Sun photo by Algerina Perna / June 14, 2004)

Consumers are finally getting a breather from the soaring cost of gas.

For the first time in a month, the national average price of gasoline fell to less than $2 a gallon, according to two separate surveys. And the Lundberg Survey reported that the average for all grades fell for the first time this year.

But motorists shouldn't count on too much more relief during the vacation season. Prices - which fell partly in response to expected higher output from the Organization of Petroleum Exporting Countries - won't drop much further for the rest of the summer, experts said.

"The good news is we're down about a nickel since the first of June, and hopefully we're stabilizing a bit for the summer," said John White, manager of government relations for AAA Mid-Atlantic. But, he warned, "It's probably not likely that gas prices will keep falling. ... We probably won't see a significant fall in prices until after Labor Day when we stop driving so much."

The Department of Energy reported yesterday that the average price of regular gasoline broke below the barrier of $2 per gallon for the first time since May 17 to $1.985 a gallon, marking the third weekly decline in price.

AAA's daily Fuel Gauge Report showed a slightly higher average at $1.994 per gallon, the first under $2 since May 18.

The biweekly Lundberg Survey showed the weighted national average price for all three grades of gasoline falling 6.5 cents to $2.04 Friday, after rising more than 59 cents since mid-December.

In Maryland, prices below $2 have become more common, though AAA reported yesterday that the average price of regular was $2.02. Prices often vary by region because of demand and how gasoline is supplied, said Paul Fiore, director of government affairs for the Washington, Maryland, Delaware Service Station and Automotive Repair Association.

The drop at the pumps reflects increased gasoline supplies in the U.S. markets in recent weeks, both from imports and increased domestic production, said Jacob Bournazian, economist with the Energy Department's Energy Information Administration.

Also, wholesale prices have dropped by about 20 cents to 25 cents a gallon since peaking in the middle of May, he said.

"Retail prices are falling," Bournazian said. "We will see them continue to fall, but very gradually during the summer because we're in a high demand period."

He predicted pump prices would fall another 15 cents over the next eight to 10 weeks, then even further once demand drops off in September.

Despite record high demand for gasoline during the spring, "the market has shown the ability to meet demand with increased imports and higher production," he said.

Drop in crude price

Wholesale prices have been pushed down by a decline in crude oil prices, which have fallen from highs of more than $40 per barrel in recent weeks.

Oil prices fell to their lowest levels in more than a month last week, with the July contract for light sweet crude slipping below $37 per barrel on the New York Mercantile Exchange for the first time since the end of April. World oil prices have eased after OPEC announced this month that it would increase production this summer to help stabilize prices.

All of that is good news for consumers, as well as for service-station dealers, who say their profit margins have been squeezed by the higher prices as volume drops off.

Mike Kolasinski, a dealer who runs the White Marsh Shell on Pulaski Highway, has been able to lower the price of regular gasoline from a high of $2.07 per gallon on June 3 to $1.97 per gallon as his costs have come down. Yesterday, he was offering a promotion of $1.93 per gallon.

"It's not a benefit when prices go up for dealers," said Kolasinski. "I'm in a very, very competitive area. These super-conglomerates like Sheetz and Wawa and Royal Farms, they can give their gas away to get people in the store. If you price too high, you're not going to pump any gas.