Gas prices dip below $2 a gallon

Thursday, July 1, 2004 | 11:05 a.m.

Where to go

Here are some places where gasoline this week was selling for less than $2 a gallon, according to observations by Sun reporters and consumer reports to the Web site VegasGasPrices.com:

LAS VEGAS:

HENDERSON:

Some consumers were rejoicing that Southern Nevada gasoline stations have dropped their prices a tenth of a penny below $2 a gallon this week, but local bail bondsman "Big Bob" Murray took it all in stride.

"I expected they would go down sometime," Murray, owner of Bob's Bail Bonds on East Ogden Avenue, said Wednesday as he pumped fuel into his pickup truck at the Chevron at Lake Mead and Las Vegas boulevards, where a gallon of regular grade petroleum was selling for $1.99 -- plus nine-tenths of a penny.

"My travel is mostly for business so of course it is good to see prices go down," he said before driving to Mesquite for a business meeting. "But the average person cannot tell you why the prices for gas go up and down. I'm sure it's politics either with the oil companies or the presidential election."

Industry experts say that the current prices, down to an average $2.10 a gallon from the May 26 local record of $2.28 a gallon for regular, are nothing to light fireworks over because, given present factors such as lower crude oil prices and refinery surpluses, prices should be even lower.

And as Las Vegans head into the Independence Day weekend, they might see gasoline prices rise slightly before again dropping, experts say.

"Nevadans should not be satisfied with this current price," said Peter Krueger, director of the Nevada Petroleum Marketers and Convenience Store Association, which represents the major retailers of gasoline to consumers.

"Nevada is a small market that has little control over gasoline prices, but we should be seeing much lower prices at the wholesale level so that our members can get their pump prices closer to the national average," he said.

Nevada's average pump prices are more than 22 cents higher than the national average of $1.90 for regular unleaded, the grade used to determine trends for gasoline prices, according to a nationwide survey by AAA, a longtime motorist services business formerly called the American Automobile Association.

Krueger said his members make about 8 cents profit on each gallon of gasoline, but profits decrease to about 2 cents a gallon on a credit card sale because of processing fees.

Sean Comey, spokesman for AAA-Nevada, said gasoline prices tend to drop when government officials investigate gas prices, as has occurred recently.

"That some people are happy about paying just under $2 for a gallon shows how badly consumers have been beaten down by higher gas prices," said Comey, who in late May testified before a House subcommittee meeting in Henderson on the issue of skyrocketing gasoline prices.

"Many consumers believe they are getting a deal at around $2, but gasoline prices should be even lower than they are now."

According to AAA's gasoline survey, Nevada has the nation's third highest gas prices behind California and Hawaii, with regular unleaded selling on average for $2.13 a gallon.

Comey said crude oil is down to about $36 a barrel. Though that is significantly more than what has been called the comfort level of $28, it also is a big drop from the mid-$40s when record high gas prices were set this year.

Krueger said major oil companies have large surpluses of gasoline despite minor glitches at two Shell refineries in California last weekend. Those incidents resulted in wholesale prices briefly rising but, he said, many Nevada retailers refused to raise pump prices and instead wait out that problem.

Comey said one key factor that keeps prices artificially high is the demand for fuel as consumers hit the road for the holiday weekend.

"AAA is projecting a 2.6 percent increase in holiday travel (greater than 50 miles from home) over last Independence Day," Comey said.

"The main reason travel has been down in recent years is more about consumers' fear of the economy, not terrorism attacks. They are still concerned about the economy, including layoffs and other threats to their jobs, but many tell us they have saved their money and they feel they need a break."

At the Chevron where bail bondsman Murray filled his tank Wednesday, a woman in an SUV said she never again thought she would see gas prices dip to under $2.

"I usually pay $2.15 near my neighborhood, but this price is just too good to pass up," she said, declining to give her name.

A man in a pickup truck at that station said he also believes "it's all politics," saying he thinks the Bush administration is calling upon the president's "big oil" friends to lower gas prices as part of a strategy to defeat Democratic hopeful John Kerry in November.

Ioannis Katsikakis, pumping $1.99-a-gallon gasoline into his Honda across the street at the Unocal 76, said he blames the Bush administration for the record high prices of gasoline earlier this year. And he thinks that overall gas prices are stil too high.

"This is the only place I have seen gasoline this low. Down the street it is still $2.07 and $2.09," said Katsikakis, who has lived in Las Vegas seven years. "Prices for gasoline should not be that high."

At the Huey Mart on Boulder Highway south of Sunset Road, where gasoline also was selling for just under $2 a gallon, a man in a Cadillac who declined to give his name said he does not understand why gasoline prices vary so much.

"I don't know why there is such a huge discrepancy from one place in Southern Nevada to another because the gasoline all comes from the same place -- California," he said.

A woman in a Toyota pickup at that location looked on the brighter side.

"Gasoline is not that high when you compare it to other products," she said. "A 16-ounce bottle of water costs 99 cents. Gasoline is cheap compared to that."

Comey said he will not be surprised if gas prices rise this weekend and fall throughout the summer.

"The important question is will they drop after Labor Day as gasoline prices traditionally do because of the decreased demand?" he said. "If the prices don't drop it could be problematic -- a sign that a new dynamic is at work in keeping gasoline prices high."

Krueger said he expects gasoline prices will continue to drop in Nevada. But he said that will depend on the same factors existing though the summer that exist today. They include no cuts in foreign oil production and no major glitches at U.S. refineries.

"I wouldn't be surprised to see regular gasoline drop to the $1.80s," he said. "But that will depend on this chewing gum and bailing wire system under which we operate holding together."