Texas: Gasoline prices may fall, analyst says

www.thevictoriaadvocate.com March 22, 2003 THOMAS DOYLE Victoria Advocate

Gasoline prices could come down significantly in the next two to eight weeks, one analyst said.

Oil prices have fallen from around $38 a barrel on March 12 to just under $27 a barrel at the close of business Friday, said Doug MacIntyre, senior oil market analyst with the Energy Information Administration, a branch of the U.S. Department of Energy.

The market is foreseeing improvements in the supply and demand situation after war with Iraq, he said, which is putting downward pressure on oil prices.

"Until something happens to shake that perception in the market, we are likely to see prices stay relatively low where they are now," MacIntyre said.

A drop of a dollar in crude oil prices equates to about a 2.4-cent drop at the retail gasoline pump, he said. The drop seen so far should translate to about a 26-cent drop in retail gas prices, he said.

However, MacIntyre cautioned that there are still many uncertainties concerning the oil market, and things could easily change.

Oil prices, and as a result gasoline prices, jumped earlier this year as oil supplies were reduced because of labor disputes in Venezuela. The threat of war with Iraq further inflated prices.

MacIntyre explained gasoline prices have remained high because retail prices are based on the average oil price over a period of time. Current retail gasoline prices still include the higher oil costs seen earlier this month.

The average price for self-service regular unleaded gasoline in Texas rose a half-cent this week to $1.613 a gallon, according to AAA Texas' weekly fuel price survey.

Increased output from Saudi Arabia has reached the American oil system, said Mary Rose Brown, a spokeswoman for oil company Valero Energy, and a large amount of oil is on the way.

The increased supply is also forcing U.S. crude prices lower and should be reducing gasoline prices soon, she said.

In addition, Venezuelan exports continue to increase closer to pre-labor strike levels, said Mike Shanahan, spokesman for the American Petroleum Institute.

"So the result is the demand pressure that had been affecting prices seems to be lessening some," he said.

"We're still waiting for there to be some downward movement (in gas prices)," said Paul Gonzales, a spokesman for AAA Texas.

Even so, people shouldn't let uncertainty lead to a gas panic, he said.

"There is ample supply to meet our normal demands for gasoline. This is nationwide," Gonzales said. "If people panic-buy it is going to cause artificial shortages and make prices go up. Just buy gas when you normally buy gas and everything will be fine."