Sunday, May 4, 2003 Posted: 7:56 PM EDT (2356 GMT)

FACT BOX Gasoline prices in selected U.S. cities. Prices are per gallon of regular: Atlanta, Georgia: $1.33 Charleston, South Carolina: $1.34 Houston, Texas: $1.42 Salt Lake City, Utah: $1.56 Boston, Massachusetts: $1.61 Chicago, Illinois: $1.62

CAMARILLO, California (CNN) -- The average price of a gallon of self-serve regular gasoline has plummeted for the sixth week in a row, falling during that time more than 18 cents, according to a nationwide survey released Sunday.

In the two-week period that ended May 2, the nationwide price fell 6.34 cents, to $1.55, said Trilby Lundberg, publisher of the Lundberg Survey.

The reasons for the price declines haven't changed since March 21, when the average gas price was $1.73 per gallon, she said.

Crude oil prices began falling after the U.S.-led war on Iraq was launched and fears receded that Iraq would set its wells afire, Lundberg said.

"That fear was removed," she said.

The situation in Venezuela, another potential source of uncertainty, has also stabilized, Lundberg noted.

A general strike in December cut petroleum output from the world's fifth-largest oil exporter to a trickle, but Venezuelan officials say they have boosted production back to pre-strike levels, Lundberg said.

Despite the recent drops in price, the average price for self-service regular gasoline is still nearly 13 cents higher than it was this time last year.

The lowest average survey price was in Tulsa, Oklahoma, at $1.29; the highest was in San Francisco, California, at $1.99.

<a href=quote.bloomberg.com>Bloomberg News Feature By Mark Jaffe

Denver, April 24 (Bloomberg) -- The Valero Energy Corp. refinery outside Denver, a jungle gym of white and silver pipes on the edge of the Colorado prairie, has been converting oil to fuel since 1937.

It's still profitable. The 27,000 barrels of oil it processes each day provide 15 percent of Colorado's gasoline and diesel fuel.

That may not be good enough. Valero, the third-largest U.S. refiner, must decide whether to spend millions of dollars to retool the plant to make cleaner fuel beginning in 2004, or shut it down.

ConocoPhillips, Exxon Mobil Corp., BP Plc and other refiners across the U.S. face the same choice. The industry estimates it must spend $16 billion to retrofit plants to meet the costliest federal clean-fuel rules since lead was banned from gasoline in 1986. Only 13 of 152 U.S. refineries now comply.

It's going to cause supply to be in shortfall, I kid you not,'' said William Greehey, Valero's chief executive, in an interview. The Denver plant will be closed unless Valero can organize a joint venture there: It does not justify those investments on a stand-alone basis.''

One Illinois plant has already been shut and five other refineries including the Denver plant are considered at risk of being closed because they are too old or too small to be profitable given the cost of retooling. The resulting consolidation of the 16.6 billion-barrel-a-day U.S. industry will reduce already-stretched capacity, company executives and analysts said. It may also cause gas prices to jump.

Less Capacity, Higher Prices

U.S. refinery capacity will shrink between 5 percent and 10 percent under the new rules, according to a study by Friedman Billings Ramsey & Co., a brokerage and investment bank in Arlington, Virginia.

``Marginal players are going to drop out,'' said Jacques Rousseau, an analyst at Friedman Billings Ramsey. Other companies will need to form alliances to cut costs, he said.

New production methods needed to produce the cleaner fuels will also cut U.S. refinery capacity. The new regulations, issued last year by the Environmental Protection Agency under provisions of the 1970 Clean Air Act, require refiners to begin reducing levels of sulfur in gasoline in 2004. By 2006, refiners must remove virtually all sulfur, under the EPA rules.

The hydrogen technology used to remove sulfur reduces the quantity of gasoline produced, and the octane as well, said Tom Nimbley, president of refining at ConocoPhillips, the biggest U.S. refiner.

The tighter capacity will make the gasoline market vulnerable to price jumps, executives and analysts said.

U.S. refineries ran at an average 91 percent capacity in 2001, according to the U.S. Department of Energy. Demand for gasoline is growing about 2 percent a year, while capacity has been growing about 1.5 percent annually, said the National Petrochemical and Refiners Association, a trade group.

No New Refineries

The system is incredibly tight,'' said Jon Kyle Cartwright, an analyst at Raymond James & Associates in St. Petersburg, Florida. A new refinery hasn't been built in the U.S. in decades, so most of the time the industry is running at more than 90 percent capacity.''

``Any disruption can lead to a jump in prices,'' he said.

Regular gasoline rose to a record national average price of $1.72 a gallon on March 18, the day before allied soldiers entered Iraq. Some refiners lost oil supplies due to a strike in Venezuela and while others were producing heating fuel.

Fewer companies and less production capacity may translate into wider profit margins for the survivors and ``lead to some good times for the refining industry,'' Jack Drosdick, chief executive of Sunoco Inc., the seventh-largest U.S. refiner, said at a conference for analysts this month.

Debate Over Costs

The price for staying in the industry will be steep. The National Petrochemical and Refiners Association estimates the new rules will cost the industry $16 billion. The EPA put the cost at $5.2 billion.

``Our experience is that industry always overestimates the cost of regulations,'' said Margo Oge, director of the EPA's Office of Transportation and Air Quality.

Refiners counter that the EPA's estimates are too low. The five largest refiners alone -- ConocoPhillips, Exxon Mobil, Valero, BP and Marathon Ashland Petroleum Corp. LLC -- are planning to spend about $3.4 billion, according to federal filings and company estimates.

The industry total will be higher. In 2002, there were 48 companies operating 152 U.S. refineries, converting crude oil into gasoline, diesel fuel, heating oil and butane for cigarette lighters, according to the U.S. Department of Energy.

'About the Worst Business'

The added costs confront an industry that has not been very profitable in the last decade. ``Until three years ago refining has been just about the worst business in the country,'' said Cartwright of Raymond James.

Sunoco, for example, has had an average annual profit margin of 2.3 percent for the past five years and Valero a margin of 1.1 percent, according to Bloomberg data. Shares in the Standard and Poor's Supercomposite Oil & Gas Refining and Marketing Index fell 2.4 percent over the past five years. The index, which includes Valero, Sunoco and five other companies, has risen 5.4 percent this year.

Refiners say they aren't sure if or how they'll be able to pass along the cost of those investments. The EPA estimates the cost at 2 cents a gallon. The refiners' association says it will be 5 cents, including annualized amortization of the investment in new equipment plus higher operating costs.

These are going to be difficult investments to recoup,'' said Joel Maness, Sunoco vice president for refining. We aren't adding capacity. We aren't making a new product.''

No Free Cash Flow

Because of that, most companies said, they will avoid borrowing to finance the cost retrofitting their plants. They will spend cash instead, as the industry traditionally does to pay for upgrading and maintenance work.

``We would prefer to issue debt only when we increase the productive capacity of our asset base,'' said Thomas Hofmann, Sunoco chief financial officer.

``There isn't going to be any free cash flow for years,'' said Geoffrey Rosenberger, who helps manage the $1.9 billion in assets at Clover Capital Management. Clover held 315,215 shares of Valero, as of December 2002.

Sunoco estimates that it will cost the company $300 million to $400 million to meet the new rules at its four refineries, Maness said.

Valero says it will spend $1 billion over the next five years to retool 11 refineries for clean fuels.

'A Lot of Money'

ConocoPhillips estimates that a third of its refinery capital spending over the next two years, about $475 million a year, will go to meeting clean fuel standards, said Nimbley, the president of refining.

BP, Europe's second-biggest oil company and the fourth- largest U.S. refiner, is spending $300 million this year to upgrade refineries.

There's no question it's a lot of money,'' John Manzoni, BP's head of refining and marketing, said in an interview. There is also no question it has to be done.''

The clean-fuel rules will help reduce auto tailpipe pollution, a key source of smog, by 77 percent, according to the EPA.

$25 Billion in Benefits

The cleaner air will prevent 4,300 premature deaths, 173,000 cases of respiratory illness and 260,000 asthma attacks among children, producing $25 billion in public health and environmental benefits, the EPA estimates.

Over a three-year phase-in, starting in 2004, sulfur levels in gasoline must be cut to 30 parts per million from 300 parts per million and by 2010 diesel fuel sulfur must drop to 15 parts per million from 500.

Since 1970 air pollution has been cut by 30 percent, the EPA says, even as the number of miles logged by American drivers has almost tripled, to 2.8 trillion in 2001.

``We've taken a huge chunk out of air pollution, but now we have to work hard just to stay in place,'' said Oge.

There is a price to stay in place.

In February 2002, Premcor, a refiner based in Old Greenwich, Connecticut, closed its plant in Hartford, Illinois. Premcor Chief Executive Thomas O'Malley said the company had ``been unable to justify the significant investment that would be necessary to remain in operation.'' ConocoPhillips agreed Wednesday to pay Premcor $40 million for processing units and other assets at the closed plant.

Refineries 'at Risk'

A Friedman Billings study listed five refineries with a total capacity of 317,800 barrels a day ``at risk'' of being closed.

These included Valero's Denver refinery; the Marathon Ashland refinery in Canton, Ohio; Farmland Industries' Coffeyville, Kansas, refinery; and ChevronTexaco's refinery in El Paso, Texas.

Marathon Ashland, the fifth-largest U.S. refiner, has no plans to close any refineries, said company spokesman Chuck Rice. ``We are investing $800 million in clean fuels over the next six years,'' he said.

As for ChevronTexaco's El Paso refinery, company spokeswoman Nicole Hodgson said, ``We are still evaluating our options.'' ChevronTexaco is spending $150 million to upgrade its Pascagoula, Mississippi, refinery to produce clean fuels.

The industry is facing big changes,'' said Edward Murphy, a senior manager at the industry trade group the American Petroleum Institute. I don't think many people realize how big.'' Last Updated: April 24, 2003 02:00 EDT

CNNMoney.com April 21, 2003: 5:13 AM EDT

CAMARILLO, Calif. (CNN) - The average cost of a gallon of self-serve regular gasoline continues to drop, falling slightly less than 6 cents over the past two weeks, according to a nationwide survey released Sunday.

The average price fell 5.73 cents, to $1.61, between April 4 and April 18. It marks the second straight drop in gasoline prices in the bi-weekly survey, which prior to that had shown prices rising since last November, said Trilby Lundberg, publisher of the Lundberg Survey.

In the past month, the price of a gallon of self-serve regular gasoline has dropped 11.8 cents, from $1.73, a "dramatic decline," Lundberg said. This year's high of $1.73 was the survey's highest ever, not adjusting for inflation.

Lundberg credited the price cut to drops in the cost of crude oil since the beginning of the war in Iraq, which continue to be felt at the pump.

The price of crude oil was at $34.93 a barrel on March 17, the day the president gave Iraq 48 hours to give up its alleged weapons of mass destruction or face war, she said. By April 17, the price was down to $30.55, she said.

Crude oil prices probably will continue to decline as oil production in post-war Iraq, Venezuela and Nigeria continue to rebound, Lundberg said.

All that could change when OPEC meets Thursday to discuss whether to curtail crude oil production in light of decreased demand during warmer weather and the expectation of the resumption of Iraqi oil production, Lundberg said.

At $1.34 per gallon, Atlanta motorists paid the least in the nation; San Francisco Bay area drivers shelled out the most, at $2.07.

Here are some other prices per gallon of self-serve regular gasoline: --Seattle: $1.74 --St. Louis: $1.39 --Chicago: $1.63 --Hartford, Conn.: $1.67 --Baltimore: $1.61 --Salt Lake City: $1.60 --Charlotte, N.C.: $1.48  

CNN Sunday, April 20, 2003 Posted: 5:59 PM EDT (2159 GMT)

CAMARILLO, California (CNN) -- The average cost of a gallon of self-serve regular gasoline continues to drop, falling slightly less than 6 cents during the past two weeks, according to a nationwide survey released Sunday.

The average price fell 5.73 cents, to $1.61, between April 4 and April 18. It marks the second straight drop in gasoline prices in the bi-weekly survey, which prior to that had been on the increase since last November, said Trilby Lundberg, publisher of the Lundberg Survey.

In the past month, the price of a gallon of self-serve regular gasoline has dropped 11.8 cents, from $1.73, a "dramatic decline," Lundberg said. This year's high of $1.73 was the survey's highest ever, not adjusting for inflation.

Lundberg credited the price cut to drops in the cost of crude oil since the beginning of the war in Iraq, which continue to be felt at the pump.

The price of crude oil was at $34.93 a barrel on March 17, the day the president gave Iraq 48 hours to give up its alleged weapons of mass destruction or face war, she said. By April 17, the price was down to $30.55, she said.

Crude oil prices probably will continue to decline as oil production in post-war Iraq, Venezuela and Nigeria continue to rebound, Lundberg said.

All that could change when OPEC meets Thursday to discuss whether to curtail crude oil production in light of decreased demand during warmer weather and the expectation of the resumption of Iraqi oil production, Lundberg said.

At $1.34 per gallon, Atlanta motorists paid the least in the nation; San Francisco Bay Area drivers paid the most, at $2.07.

Here are some other prices per gallon of self-serve regular gasoline:

• Baltimore: $1.61 • Charlotte, North Carolina: $1.48 • Chicago: $1.63 • Hartford, Connecticut: $1.67 • Salt Lake City: $1.60 • St. Louis: $1.39 • Seattle: $1.74

Charlotte Posted on Fri, Apr. 18, 2003 DIANNE WHITACRE Staff Writer

With the Easter weekend starting today, Carolina drivers will find gasoline prices down about 10 cents from a month ago.

It's the fourth consecutive week that prices have dropped as the war in Iraq winds down, supplies increase and the oil market loses its jitters.

N.C. prices average $1.54 a gallon for regular and $1.47 in South Carolina, where gas taxes are lower. In North Carolina, they range from a low of $1.49 in Raleigh to $1.60 in Boone, according to AAA Carolinas. South Carolina prices range from $1.39 in Spartanburg to $1.55 in Myrtle Beach.

Ginger and Pete Maxwell of south Charlotte were gassing up their Chrysler van Thursday on their way to Emerald Isle. "We'd go to the beach whether gas was $1 a gallon or $5 a gallon," Pete Maxwell said. "But I can't complain about the price drop."

Federal analysts predict gas will average $1.56 a gallon nationally this summer, up from $1.39 last summer. The national average is $1.58. The U.S. Department of Energy says uncertainties in the Middle East, Nigeria and Venezuela still affect the market.

The department also expects gas sales to increase 1.6 percent this summer over last as the recession eases and travel goes up.

The Organization of Petroleum Exporting Countries announced it will hold an emergency meeting next week to discuss cutting production. World supplies are up because of extra exports by Saudi Arabia.

Earlier this year, on the eve of war, a few private analysts predicted prices over $2 a gallon. Prices peaked well short of that in the Carolinas. Prices for regular were a high of $1.63 in North Carolina and $1.58 in South Carolina, in mid-March.

Crude oil prices reached almost $40 a barrel before the start of the Iraqi war, but have fallen to less than $30 a barrel -- its lowest price in five months.

The United States imports 55 percent of its petroleum.