Gasoline prices ease, but does a rebound loom?

www.zwire.com By Amanda Lee, Macomb Daily Staff Writer February 25, 2003

Macomb Daily photo by Ray SkowronekA Mount Clemens service station reflects a slightly lower price than the week's going rate. The inexplicable drop in gasoline prices this week is causing some analysts to scratch their heads while motorists scramble to fill up their tanks. "You don't know how long it's going to last so I'm going to take advantage of it," said Sid Hawking, 56, of Mount Clemens. "I kept expecting prices to go up and up so when I saw on the news last night they were down I knew now would be a good time to get a full tank. "I'm going to run home and get my wife's car after this and fill her up, too," he said. Michigan pump prices surprisingly dropped 5.1 cents this week, according to AAA Michigan, to a new level of $1.702 per gallon. The metropolitan Detroit average was down 4.4 cents to $1.673 per gallon. "We don't really know why they dropped," said Jim Rink, spokesman for AAA Michigan. "Usually there's plenty of reasons to say why gas goes up but the only time it goes down is when there's a drop in crude oil prices." Rink said he checked local market figures and crude oil prices Monday morning -- but prices had not fallen. "I really don't know why," he said. "It could just be a short term adjustment." Gasoline prices had jumped to their highest levels since the Sept. 11 terrorist attacks amid fears of a war with Iraq and concerns about an ongoing oil strike in Venezuela, a large world oil producer. In addition, a refinery fire in New York late last week was cause for additional concerns. "I did see an item that said that the (refinery fire) would not be a major disturbance," Rink said. "I don't know what to think." Despite the unexpected drop, however, the statewide average now stands at 55.6 cents more per gallon than at the same time in 2002. "It's still high, but it gives me hope that this is a sign that prices are going to go down again," Hawking said. "Everyone kept saying they were going to go above $2 (a gallon), but I think the powers-that-be have seen that we won't put up with that." Trilby Lundberg, a national gas analyst, expects the upward pressure on gasoline markets to yield soon due to increased production in Venezuela, the approach of warmer weather and the reopening of various U.S. refineries that had been idled for annual maintenance. "They have excuses for everything," Hawking said. "In the summer it's because the gas is more expensive to refine, now in the winter those refineries are closed, what I want to know is when does it all stop?" The decline in Michigan prices reflects the volatility of the market, said Ed Weglarz, executive director of the Service Station Dealers Association of Michigan. "Sometimes the gasoline pricing changes every day," Weglarz said. "The gasoline market tends to be like the stock market -- when in doubt, raise the price."