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LUBBOCK, Texas -- The average national price per gallon of gasoline has fallen almost 40 cents since hitting $3.22 per gallon on May 21, and this decline should continue through the rest of 2007, according to a short-term outlook published Tuesday by the Energy Information Administration, Lubbock Online reported.
Price dips are common in the fall, and this year, they are dropping from record highs in May caused by speculation, hurricane fears and refinery problems, the report stated.
However, Jeff Morris, chief executive of Alon USA, cautioned those who are overly optimistic. "If anyone could predict the price of gasoline in the future, they'd be a multimillionaire right now," Morris said in the Lubbock Online report.
Americans were projected to use an average of 9.5 million barrels a day this summer, up 1 percent from the previous summer, and total consumption was projected to be up 1.3 percent from last year, to 20.9 million barrels a day, the report stated.
Production did better, according to the Energy Information Administration report. Crude oil production was projected to be up nearly 1 percent and domestic production to increase 4.8 percent in 2008.
New deepwater drilling projects in the Gulf of Mexico as well as the recovery of domestic refineries from unplanned outages in the spring were helping the numbers, but most of the relief would be the normal, seasonal drop in prices, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University in the Lubbock Online report. Those costs were still recovering from where speculators drove them last spring, said Fred Rozell, director of retail pricing for the Oil Price Information Service in the report.
"This year, the hype brought the prices up to some extreme numbers and people were worried about a strong hurricane season," Rozell said in the report. "We haven't seen that materialize yet, refineries are coming back online, we have good supplies, so it's all leading to, sort of, a collapse in prices."
Higher wholesale prices cause drivers to buy less inside stores that sell gasoline, cut into the profit margins of convenience stores and encourage customers to use credit cards, which cost the stores even more money today.
"Not a lot of good things happen to retailers when prices are elevated," said Jeff Lenard, spokesman for the National Association of Convenience Stores, in the report.