Here's good news: Gas under 60 cents. Drop reflects end of war in Iraq--Warm weather could push prices up

<a href=www.thestar.com>TorontoStar.com May. 1, 2003. 07:31 AM KAZ NOVAK/THE SPECTATOR JOSH RUBIN STAFF REPORTER

  Filling up at the Esso station near Bathurst St. and Lake Shore Blvd. W. yesterday afternoon, Derrick Su couldn't wipe the smile off his face.

"This is great. I'm saving 10 or 15 bucks every time I fill up. I wish it would go even lower,'' said Su, pumping his sport-utility vehicle full of regular gasoline at 59.9 cents per litre.

For the first time in more than a year, gasoline prices around Toronto slipped yesterday below 60 cents per litre. Motorists were paying almost 80 cents per litre just a month ago as fears of war in Iraq pushed up the price of crude.

But by late afternoon, the price for regular gas at the Esso station had moved back up to 68.9 cents per litre.

The head of a Calgary-based oil-and-gas research firm cautioned that the price of crude is only one factor in the price at the pumps.

"You've got other things going on. In Toronto, it's a very competitive retail market and that can move the price,'' said Michael Ervin, president of Calgary-based oil and gas research firm M.J. Ervin and Associates.

According to Ervin, the price of gasoline could drop even lower in the short term. "You can talk about another 5 cents if you want to. There's still some room for downward momentum in gasoline prices.''

The price could drop as cheaper crude oil works its way through the refining system and shows up at pumps, said Ervin.

"In a bigger market like Toronto, the lag-time between oil getting pumped out of the ground and showing up at a gas station isn't all that long. It's normally three weeks or so,'' said Ervin. Any gasoline price drop would be tempered by the fact we're coming into peak driving season, Ervin warned. More demand for gasoline means higher prices, he said.

``The big driving season really starts in May, depending on how nice weather is.''

Over the past six weeks, crude prices slid from $39 (U.S.) per barrel to around $25 per barrel. In New York yesterday, light crude was at $25.24 per barrel, just 30 cents off an 11-month low.

The drop in the price of crude reflects a quick end to the U.S.-led invasion of Iraq and the end of a strike by oil workers in Venezuela, said Jim Rollyson, an oil analyst with Raymond James, a U.S. brokerage firm. It also reflects an increase in production by the Organization of Petroleum Exporting Countries cartel, Rollyson said.