Experts question timing of drop in gas prices

Monday, Sept. 29, 2003 | 11:16 a.m.

The mystery is not that unleaded regular gasoline prices in Nevada are down 20 cents a gallon from a month ago, but rather what took so long for them to drop, experts and motorists agree.

AAA and the Lundberg Survey, two industry leaders in monitoring and analyzing prices, show significant decreases in all fuel grades in their most recent reports.

But AAA-Nevada, which monitors prices primarily for consumers, questions why the prices didn't more sharply dip in mid-September in Las Vegas and elsewhere.

"All of the factors that contribute to prices going up and staying high were on their way to being reconciled," said AAA-Nevada spokesman Sean Comey. "It's a case that prices react to market conditions by rising sharply, but they come down slowly. They really should have been down two weeks ago."

Comey was referring to factors such as the repair of the pipeline to Arizona. When that pipeline was closed for repairs more gasoline from California refineries was shipped to Phoenix instead of to Las Vegas.

Another problem was crude oil prices being above $30 a barrel. Crude has since dipped to about $28 a barrel, the price at which pump prices tend to stabilize, Comey said.

The average gas prices in Nevada today, according to AAA: $1.82 a gallon for unleaded, $1.93 for mid-grade, $1.99 for premium and $1.66 for diesel compared to respective prices a month ago of $2.02, $2.13, $2.20 and $1.79.

The average gas prices in Las Vegas today, according to AAA: $1.80 a gallon for unleaded, $1.90 for mid-grade, $1.97 for premium and $1.68 for diesel compared to respective prices a month ago of $1.95, $2.06, $2.13 and $1.79.

However, prices in Nevada and Las Vegas are still well above a year ago: $1.51 a gallon statewide and $1.48 locally for unleaded regular, $1.59 and $1.58 for mid-grade, $1.65 and $1.61 for premium and $1.63 and $1.62 for diesel, according to AAA.

Nationwide, AAA says unleaded is selling for $1.60 a gallon compared to $1.74 a month ago and $1.41 a year ago. Other national average prices now, a month ago and a year ago: $1.70, $1.84 and $1.50 for mid-grade; $1.76, $1.90 and $1.57 for premium; and $1.52, $1.58 and $1.46 for diesel.

The Lundberg Survey of 8,000 stations nationwide found that retail gas prices slid more than 10 cents per gallon over the last two weeks, the biggest drop in two years.

The average price for a gallon of self-serve gas nationwide, including all grades and taxes, was about $1.65 on Friday, according to the Lundberg Survey.

That was a decrease of 10.23 cents per gallon since the last Lundberg Survey was taken Sept. 12.

Analyst Trilby Lundberg said the drop was largely driven by an increase in supplies following shortages in August, when electricity blackouts shut down several refineries and a West Coast pipeline rupture halted gasoline deliveries to Phoenix.

Gas prices edged up last month and peaked Sept. 12 at about $1.75, she said.

The end of the summer driving season also eased pressure on prices, while gasoline imports added to overall supply, she said.

The drop marked the largest decrease since the terrorist attacks on Sept. 11, 2001. The weighted nationwide average retail gasoline price fell from about $1.54 to nearly $1.43 during the two weeks before Oct. 5, 2001.

Lundberg predicted that a decision last week by the Organization of Petroleum Exporting Countries to cut daily production by 900,000 barrels as of Nov. 1 would not cause a surge in gas prices.

Instead, she said, prices would continue to fall, though not as steeply, because of a lower consumption season and increased competition among gasoline retailers, she said.

As of Friday, self-serve regular gasoline showed an average weighted price nationwide of $1.62 a gallon, with mid-grade at $1.72 and premium at $1.81.