'Significant decline' in gasoline prices likely by Labor Day: EIA

'Significant decline' in gasoline prices likely by Labor Day: EIA

Washington (Platts)--16Aug2006

US motorists could feel some relief at the gasoline pumps in the next few
weeks, as retail prices begin a "significant decline" as a result of lower
demand and last week's sharp drop in crude oil prices, the US Energy
Information Administration said Wednesday.

By the September 4 Labor Day holiday, average retail gasoline prices,
which have been doggedly stronger than last summer, could for the first time
this year dip below last year's levels, EIA, the statistical arm of the US
Energy Department, said in its This Week in Petroleum report.

"Given that the final three weeks of summer last year saw retail gasoline
prices rise nearly 52 cents (most of that in the final week, due to Hurricane
Katrina), we are likely to see prices finally dip below year-ago levels by
Labor Day," EIA said. "While this may provide scant comfort to US drivers
still paying around $3 per gallon for gasoline, it's a relief to some who
feared prices might have gone even higher this summer."

Average summer 2006 retail gasoline prices have been the highest on
record, not adjusting for inflation, surpassing last summer, which was the
highest to that point, EIA said. On Memorial Day, which was May 29, the US
average retail regular gasoline price stood at $2.867/gal, 77 cents higher
than the corresponding week in 2005. But on Monday, EIA reported that average
prices dipped 3.8 cents/gal -- the sharpest decline of the summer -- to
$3/gal, 45 cents/gal higher than a year ago.

EIA cautioned that its forecast of declining gasoline prices assumes no
major supply disruptions, such as another Gulf Of Mexico hurricane shuttering
offshore production and onshore refinery operations.

--Cathy Landry, cathy_landry@platts.com

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