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Posted on  

December 26, 2001

Gas prices still falling

But slowing oil production may soon bring an end to steadily declining prices at the pump.

The average cost of a gallon of gasoline in California is down more than 50 cents from a year ago.

BY GARY RICHARDS
Mercury News

Gasoline prices continued their free fall throughout the Bay Area and the nation this weekend, but the slide may be about to end.

Oil companies have begun to curb production in an effort to bolster prices that have dropped to an average of $1.17 a gallon in California and $1.09 nationwide, according to the state auto association -- the lowest marks since early 1999.

San Jose's average gallon was $1.30 on Friday, but even brand-name stations were selling a gallon for less than $1.20. The price in San Francisco was still the highest in the state at $1.47 a gallon.

Prices have fallen 21 cents on average in California over the past month and are 52 cents lower than a year ago.

``Eventually this slide will come to an end,'' said Bronwyn Hogan, who tracks energy prices for the California State Automobile Association. ``Quite frankly, if it's not come to an end already, we're very close to that point.''

Trilby Lundberg, another industry analyst who listed the nationwide average at $1.12, said prices could bottom out as early as January.

Signs certainly point to a leveling off at the pump.

U.S. refiners slowed production last week by 358,000 barrels a day, and refineries that had been cranking out gas at record levels are now down to 89 percent of capacity. Imports dropped nearly 50 percent.

While supplies of all types of gas in California remain nearly 17 percent higher than a year ago, production is nearly 3 percent lower, according to the California Energy Commission. In comparison, production at state refineries on Dec. 4 was 3 percent higher than a year earlier.

That's the first drop in production in nearly four months, and another tip that the huge glut of gas is evaporating.

The cheapest gas in California can be found in Fresno, where the average stood at $1.02 for self-serve unleaded on Friday -- a penny cheaper than in Los Angeles.

Gasoline prices in Silicon Valley kept falling last week. A Shell station at San Tomas Aquino Road in Campbell was selling its cheapest brand for $1.18 a gallon on Sunday. Discount stations such as Arco and World have dropped to $1.15.

``That's remarkable for branded gasoline to drop to such low levels,'' Hogan said.

World oil prices have been inching up as the Organization of Petroleum Exporting Countries, which accounts for about one-third of the world's oil output, is expected to implement a 6 percent cut.

Though economic conditions aren't expected to improve in the near future, Lundberg said retailers will be forced to raise prices shortly if they expect to stay profitable.

If prices do rise or at least stabilize, few expect them to reach record levels set in June when San Jose reached an all-time high of $2.07 a gallon.


 

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