Price of gas falls nearly 10¢ in Md.

Gallon of regular unleaded averages $1.96, from peak of $2.05 June 3, AAA says

By Lorraine Mirabella | Sun Staff

June 29, 2004

Marylanders get to hold on to more of their dimes, at least for now.

Consumers in the state are paying nearly 10 cents less for a gallon of regular unleaded gasoline than a month ago, the local AAA said yesterday. The price of regular gas in the state dropped to an average $1.96 per gallon yesterday.

At a time when gas prices have spiked in recent months to record highs, falling prices in Maryland and nationally are offering some relief at the pumps.

The lower prices, driven by a recent drop in wholesale prices and increased crude inventories, are especially welcome heading into the July Fourth holiday when gas consumption rises as Americans do more driving, experts said.

"This time of year... people are traveling more, so this gives them a little relief, even if it's mostly psychological," said John White, spokesman for Mid-Atlantic AAA.

"You're going to have a roller-coaster summer," White said. "Prices will probably head back up and you'll see a final spike before Labor Day. The situation in the Middle East could make this an even more volatile year."

In its daily fuel gauge report, Mid-Atlantic AAA said regular gas in Maryland averaged $1.96 per gallon, down 9 cents, from $2.05 a month ago. That compares with $1.47 a year ago.

The average price of regular gasoline had risen to $2 per gallon in Maryland on May 21, and peaked at $2.054 on June 3.

Nationally, regular gas averaged $1.92 per gallon yesterday, down 13 cents from $2.048 per gallon a month ago, AAA said. That compared with $1.48 a year ago.

In a separate survey, also released yesterday, the Energy Information Administration said the price of regular gasoline nationwide averaged $1.92 per gallon. Gasoline prices nationally have dropped about 13 cents a gallon over the past four weeks, according to the EIA survey. Prices had surged nearly 40 cents per gallon since January.

"We've seen retail prices starting to come down since Memorial Day, and I think we'll see a few more weeks of slow, but continuous, small price declines," said Jacob Bournazian, an economist with the EIA, an agency of the Department of Energy.

Gas prices will likely drop further, but only slightly, before spiking up again before the end of the summer, experts said.

Bournazian predicted prices would drop another 3 to 5 cents.

That's because wholesale prices have fallen by about 20 cents since the middle of May. There usually is a two- to four-week time lag in passing through changes to wholesale prices at the retail level, he said.

"We've seen 13 of the 20 cents passed through, and that extra nickel or so will also be passed through, though not at the same aggressive pace," Bournazian said.

In Maryland, "We've been following the national pattern, we're not leading it," said White, the Mid-Atlantic AAA spokesman.

Crude oil prices, which have moderated in the past three weeks after the Organization of Petroleum Exporting Countries announced plans to increase production next month, have also been driving gasoline prices down.

Yesterday, crude oil prices were pushed even lower as the U.S. coalition authority handed over power to Iraq two days ahead of schedule.

"It's a big day and the markets are reacting to it. But even before this, prices were on the way down" as production and supply from refineries has begun catching up to growing demand from consumers, said Phil Flynn, senior oil market analysts at Alaron Trading in Chicago.

The higher gas prices are not expected to curtail Americans' vacation plans for the July Fourth holiday, AAA said yesterday.

Some 39.4 million Americans will travel 50 miles or more this weekend, a 3.4 percent increase from last July Fourth. Of those traveling, 87 percent are expected to go by car, a 3 percent increase from last year, AAA said.

In Maryland, some 675,000 people will travel 50 miles or more, a 3.4 percent increase, with some 605,000 planning to drive, a 5 percent rise, according to a AAA survey released yesterday.